Welfare Reform Bill

Baroness Sherlock Excerpts

Monday 12th December 2011 Lords Chamber

[Lord Ramsbotham]

I too apologise for not being here at the start. I just ask the Minister to reflect on the words of my company sergeant-major when the Army moved from weekly pay packets to bank accounts. He said, “Thems that pays by the week lives by the week, but if you pay them by the month they will still live by the week”.

[Baroness Sherlock]

My Lords, I have a couple of brief points to add. One is addressed to the noble Lord, Lord Hamilton. Perhaps he would like to reflect on the fact that what the Minister is doing in this Bill is taking two completely separate systems of support, one for those in work and one for those out of work, and creating a single seamless new product. However, for that to work, it must meet the needs of both sets of people. I think that was the point that the noble Lord, Lord Kirkwood, was making just now—that the Minister may want to effect a culture change for those who are in work, or whom he would like to be in work, but universal credit is also available to support many people who are not required to work, who may never be required to work and who may never be capable of working. Why should they be forced to go through a culture change to no end? Is there really a strong case and can the Minister explain it to us?

Secondly, I want to pick up on the very good point made by the right reverend Prelate the Bishop of Leicester that it takes a lot of time, energy and skill to manage on a very small amount of money. It also takes a lot of intelligence and aptitude to be able to budget well on that. Perhaps the Minister could reflect on what may seem to be simply a matter of timing. If one has plenty of money it is much easier; it is also easier if one has a pot of working capital, so if something goes wrong one month the consequences are simply that you dip into your savings. I spent some years working with single parents and most of them had almost no cushion at all, so if they got it wrong they had nothing to fall back on. For many poor people, their friends are also poor, their families are poor; they do not have the kind of networks where you simply go and borrow from somebody else or you to go the bank and ask it to lend the money, because it will not. The consequences for those families of getting that budgeting wrong can be very severe. Given what is happening in other areas to the Social Fund and the other kinds of support, we really do not want to be driving people into the arms of moneylenders.

Finally, within that group there are some people who, because of their particular circumstances, have very strong reasons why they need to be paid regularly. It is a point I made in Committee but I think it bears repeating here. I have worked with families where, for example, the husband had a problem with drugs or alcohol and went off on a bender and spent the week’s wages; the mother would have to find a way of feeding the children until the next benefit cheque arrived. If that happens in one week, it is difficult; if it is happening in two weeks, it is difficult; but as the noble Lord, Lord Boswell, will appreciate, if it is not a matter of “life after next Tuesday” but “life for the three weeks that follow next Tuesday until the end of the month”, how does she manage?

The question the Minister has to answer is not whether he would like to do this; I have no doubt that he would. Rather, it is: is the price that will be paid by some of the poorest people really worth the culture change he wants to achieve?

[Lord German]

My Lords, I am always staggered to find out more about my noble friend Lord Kirkwood. In Committee we learnt what he did in the bath, and now we have learnt that he goes around arresting bank accounts. We have been having some very interesting debates. However, I am slightly less sanguine about this issue than he is, perhaps largely because many of your Lordships have said that we have to look at people for what they can do and what their ambitions are. People, and groups of people, are not all the same. It strikes me that this is not about going in one direction or another, and that we are treating people as having exactly the same ability to manage their own money.

I also heard in Committee the Minister’s ambitions for looking at other methods of dealing with payments. I looked back over the last four to five years of the growth in the Post Office card account and in basic bank accounts, which of course is where you would expect to find the sorts of people who make and deal with money in this manner. And there has been growth; in fact, 12 per cent of the whole population—according to the appropriate survey done by the DWP, which is published on their website—is using one of those two bank accounts.

It also struck me that the price that we are paying for the Post Office card account is frighteningly expensive for what we get as a country. It is a bank of this country, and a bank, JP Morgan, underwrites it, and it charges the state for managing these Post Office card accounts. I believe that we pay something like £50 each a year—£142 million per annum—have those accounts run for us. It strikes me that we perhaps need a presumption to ensure that we put things of this nature in place by giving people the appropriate support, but at the same time ensuring assistance for those who cannot. The language that I have heard many Lordships use, which seems to come from the documents, is the “chaotic family syndrome”, where people just cannot manage and need to have some different form of assistance. That is why I started by saying that we should not treat everyone in the same way.

The Post Office card account is a bank account. It does not come with what we might normally expect a bank account to have, but why not, when we are paying so much money for it? Why are people not able to make payments from it for their utilities and gain benefits and savings? I guess that most noble Lords do this because of the way in which they pay for their heating, electricity and gas at the present time. Surely we should be offering that opportunity and using that ability to help people in that manner. We also should not think that people should not be able to separate out their money in the way in which they pay it to themselves. However, in order to do that you have to have appropriate levels of support.

My question to the Minister is: if you are pursuing the idea of developing the facilities which a large number of people currently use for payment, will you also be able to offer advice and support to assist those people who might wish to avail themselves of an enhanced system that allows them to pay their utility bills monthly by a straight payment or direct debit, thus allowing them to get the benefits of reduced charges?

I noticed that the Cabinet Office issued a press release for those who live in England, which says that £16.8 million of support will be given for free debt advice in this country. Does the Minister regard that as being some of the funding that he intends to use for the support that might go with these enhanced accounts?

I know that over the years there has been considerable discussion about the use of the Post Office card account, primarily, of course, in the context of trying to support the local post office in each of our communities. Surely, however, if we were able to do more with it and to provide that advice, perhaps even at the Post Office, it might even be better to do that with the funding that might be available.

There is the problem that many people, or some people, will not be able to manage and will need alternative forms of assistance and advice. My noble friend Lord Boswell was saying that we ought to move in one direction, but it strikes me that we must be wary and understand that there are people who will not be able to manage. We must be able to assist those people properly.