Welfare Reform Bill

Jim Shannon Excerpts

Wednesday 15th June 2011 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I commend credit unions to all Members for the work they do, but for those in financial difficulties, the crisis is already there and unless someone is already in a credit union, they cannot borrow from it. With respect, I do not believe that credit unions are an option.

[Ms Buck]

That is absolutely right. The Government mention credit unions as part of the package of alternatives that they want to see picking up the slack. They may have a role for some people, but the hon. Gentleman is right that they are not an emergency response. As I said in my opening remarks, precisely because a disproportionate number of the individuals who need crisis intervention do not have a local connection or a stable household background, they are the ones who will not be in a credit union. They are disproportionately unlikely to be in a credit union or to have the scope to be able to join one. That is precisely why the social workers—expected to be a part, although admittedly not the entirety, of the gatekeeping process for the replacement of the discretionary social fund—are so concerned. Although they will not be alone, they will be very much on the front line of gatekeeping for this dramatically reduced and very different type of service, which is patchy and might be flourishing in some cases and not in others. As I said in Committee, the consortium of community care stated a few months ago that social workers are anxious about having to deliver the social fund, knowing that applications for community care grants are already turned down in 60% of cases. They say that their role as advocates and supporters for people in need through a crisis in their lives is dangerously undermined by the new financial gatekeeping role that they will be asked to take on.

In evidence to the Committee, Councillor Steve Reed, speaking on behalf of the London Councils and the Local Government Association, said that local authorities have expressed an in-principle willingness to be part of this process. I understand why he would do that. He also told the Committee that he was worried that the localisation of the discretionary social fund should be fully funded and that it should cover all the costs, including the administration costs, which, for the community care grant alone, were £19 million in 2008-09. As we have drawn out in the debate over the past hour, the likelihood is that the administrative process for local government and the gatekeeping, which will not simply be about deciding whether to give a crisis loan or community care grant but whether to find people alternative levels of support, are likely to put an increased financial burden on local authorities.

Some Government Members on the Committee argued that social workers and others will be able to provide more intensive, personalised intervention for people in crisis, helping to end a cycle of repeated loan applications, but that is likely to make the situation worse. If the 3.64 million crisis loan applicants or 640,000 applications for community care grants have to be funnelled through a more intensive and personal level of intervention, who will do that work? Where are the social workers and the available time in local government to improve on this? The answer is that they will not be there. Local authorities are retrenching and they are on the back foot financially, and the likelihood is that they will have a smaller pot of money as they act as gatekeepers for an even wider group of individuals.

The Minister tells us that there is an expectation that there will be some form of review process, but the current review process is national and now every local authority will be expected to set up its own, leading to huge complications with differences in approach and the structure and bureaucracy of setting up a process in every local authority to determine how initial decisions will be reviewed and appealed against. I know that that causes a great deal of alarm in the advice sector.

Let me return to the vexed concern about local connection. Sample work on discretionary fund cases was carried out by the Department last year, which considered a basket of 500 different cases, and 20% of those cases involved people who were homeless. Some 20% and more of the applicants in such cases—the amount varied between different parts of the country—had no single connection with any individual local authority. That is my single biggest concern about the Government’s approach to this agenda.

One example, which was highlighted in the media last week, is the case of victims of domestic violence. A group of the women’s charities has written to the Minister for Women and Equalities, warning that some councils will not be financially able or willing to help women escape violent partners on the grounds of the provisions in this part of the Bill. The belief is that there will be an increased postcode lottery of provision that does not reflect the Government’s previous claim that tackling domestic violence is a priority and the fear is that councils could impose a local connection test that could disadvantage women fleeing domestic violence who are often, almost by definition, forced to move into another local authority area. The charities say that many women fleeing the home have to leave everything behind, including household furnishings and essential items, such as cookers, that most families take for granted to rebuild their lives in a new home. They quoted a mother from Croydon, south London, who left her abusive partner in 2003 and said that she had only been able to escape a life of domestic violence thanks to a £700 grant that helped her to rebuild her life. The chief executive of Women’s Aid said:

“The social fund is a vital resource for victims attempting to rebuild their lives after domestic abuse and, if it is not available, victims may be forced to return to their abusers.”

The director of Refuge added that if the discretionary social fund is abolished, there is a risk that

“more women will be forced to delay their escape from their partner.”

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[Madam Deputy Speaker (Dawn Primarolo)]

Order. I do not think that the hon. Member for Witham (Priti Patel) is giving way; she has concluded her remarks.

[Jim Shannon]

I am not against the principle of welfare reform, but I am against how it affects those people who regularly come to see me. Not a week passes in the offices that I look after in which we do not see people who need crisis loans, and we hear from people who are under financial pressure all the time. With respect, I sometimes wonder whether some hon. Members have ever seen a social fund or crisis loan form. Do they know what it is like to be in financial crisis and under pressure?

I support the amendments for a number of reasons, and I hope they will be put to the vote. What happens in the House today will be sent to the Northern Ireland Assembly for its endorsement. On the principle of parity with the rest of the United Kingdom, I expect the Northern Ireland Assembly to endorse the decision of the House. The measure will then become the law for Northern Ireland as well. So if we feel concerned about it, we must oppose it here today. That is what the people I represent tell me.

Most of us are probably affluent enough to be able to borrow money from the bank if we are under financial pressure, but the people who come to me in my office seeking crisis loans through the social fund cannot do that. They do not have the option of the credit union either, because of the credit union methodology. I fully support credit unions. Everyone on the Opposition Benches who has a particular knowledge of credit unions would support them 100%, as we have in the past, but they are not an option for people in financial crisis, as the Government have suggested.

[Naomi Long]

Does the hon. Gentleman agree that part of the difficulty is that in circumstances where people’s finances are very stretched and they are very vulnerable, the crisis loan system stands between them and lenders with extortionate interest rates and loan sharks, which can impact not only on their financial welfare, but on their health and well-being more generally?

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[Jim Shannon]

I thank the hon. Lady for her intervention. She clearly has cause to represent people in relation to social fund issues and has a good understanding of the financial crisis they face.

Many of the people who come to me in my office have health problems. If they are unable to work, possibly because of an injury at work or an accident at home, they are left facing a financial crisis. Intimidation is not rife in Northern Ireland and nowhere else; it happens in other parts of the United Kingdom as well, and there are occasions when someone has to leave home quickly, and they face financial crisis. Most of those who come to me are single people, maybe a single parent with a young child, or sometimes they are people coming out of care or out of prison, or people who have experienced family break-ups.

The hon. Member for Makerfield (Yvonne Fovargue) described the situation well, and I share her experiences as a representative. Those people are under great financial pressure and are worried about where they are going to go. They look for alternatives to borrowing money. Sometimes, as a result of their inability to pay back their loans on time, they end up in hospital. Loan sharks are probably the only people willing to lend them money but at an extortionate rate, which puts them under great pressure. I am sure other hon. Members have seen that.

[Mark Durkan (Foyle) (SDLP)]

Is my colleague, like me, at a loss to understand how some hon. Members who are prepared to commend the social fund measures are the same people who, in relation to parliamentary expenses, argue for the operational principles of clarity, predictability, responsiveness, consistency and the right to query or appeal? They demand those operational principles where it affects themselves, but they are prepared to mangle them where they affect their most marginal constituents when it comes to the social fund.

[Jim Shannon]

I thank the hon. Gentleman for his passion and his commitment. I would find it difficult to argue against those points. I should like to hear from the Minister what measures the Government intend to put in place to ensure that the people whom I have described—the single people facing financial problems or those experiencing health problems, marital break-ups or intimidation, who clearly have problems at home—will fit into the system. I do not see that they will. I see extreme difficulties for them in future.

The hon. Lady spoke about those managing debt. Not everybody has the ability to manage their financial circumstances. We meet people in my office who unfortunately fit into that category. We try to advise them or send them to someone who can give them advice and help, but in many cases they are unable to manage their financial circumstances. The crisis loan enables them to borrow and get out of the crisis that they face, and agreeing a direct debit helps them to manage their money.

For those who come to me in financial crisis, the crisis loan is their only way out. I would love to be the Northern bank or the Ulster bank and be able to lend all those people money personally, but unfortunately my resources do not go that far and it is not my responsibility to do that singly and individually. That is the responsibility of Government.

[Bill Esterson]

The hon. Gentleman makes a strong case for his concerns about the loan system. What worries me, reading the clause, are the references to discretion and appropriate decisions by the Treasury about what does or does not constitute grounds for payment on account. A constituent who came to me was denied employment support allowance and was told that he was fit for work. When he went to the jobcentre, he did not qualify. That person needed three separate crisis loans. The point about managing debt is well made. The issue of appropriateness will cause huge problems.

[Jim Shannon]

I thank the hon. Gentleman for his comments. Many Members in all parts of the House know how the system works and the importance of a crisis loan system operating through the social fund.

My final point relates to the appeals system. The proposed changes will do away with the independent appeals system or at least make it unnecessary. I fought a number of appeals for people who had applied for crisis loans through the social fund. Having the appeals system in place is critical. If they are turned down the first time, it may be because they provided the wrong information, or because all the necessary information was not available. An appeals system allows a review to take place. It is crucial that the independent appeals system is retained.

The system of crisis loans through the social fund is a crucial aspect of life in Britain today for the people who come to my office and for those I meet. It gives people hope and an opportunity to get out of sometimes dire financial circumstances. The Government, the House and we as elected representatives have a duty to make sure that the social fund and the crisis loan are retained.

[Bridget Phillipson]

I am grateful for the opportunity to speak to this important group of amendments concerning the discretionary social fund, particularly amendment 39, which calls on the Government to bring forward detailed proposals for the replacement scheme.

Discretionary social fund payments, such as crisis loans and community care grants, provide an essential safety net for some of the most vulnerable people in our communities who, at times of extreme hardship or disadvantage, need financial support. One such group I wish to talk about in detail are women fleeing domestic violence who, through no fault of their own, are forced out of their own homes and have to seek shelter elsewhere. It is because of my experience working with women affected by domestic violence and their families that I am so concerned about the Government’s proposals and what they could mean for those women.

A woman fleeing domestic violence often must leave her home with nothing more that the clothes she is standing in, without money or access to money, but she still needs access to vital items for herself and her children, from food and nappies to children’s clothing. The social fund provides a vital lifeline for those women. Although far from perfect—I admit its shortcomings—it gives reassurance to the woman that help is available should she need it so that she does not feel pressured to return home to violence simple because she has no access to money. Community care grants allow women to start afresh, with a new life and a new home, by covering some of the costs attached, such as a washing machine or a cooker.

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[Margaret Curran]

This is embarrassing, because hon. Members are putting the argument so much more effectively than I am.

To conclude on this section of my contribution, may I make an appeal to Members of the House? We have a moment in time. We are being watched by disabled people this afternoon, and by their organisations. This goes to the heart of what we are about. People will be prisoners in residential care and prisoners in their own homes if this provision is removed from them. Many opportunities for them will also be withdrawn. I appeal to hon. Members: let us do the right thing this evening and vote for amendment 43—I also intend, Mr Deputy Speaker, to press amendments 42 and 44 to a Division when the time comes.

I shall now discuss specific aspects of the personal independence payment that should be changed to make the new benefit fairer and more effective in giving support to those who need it, and to assist a smooth transition for existing claimants to the new benefit. Amendments 44 to 47 seek to amend clause 79 and the proposed change to the required period condition for PIP. The amendments would retain the three-month period that claimants must wait before they are eligible to receive PIP, but would extend the period over which a claimant must show that they will be with that disability from six months, as is currently the case with DLA, to nine months.

In other words, for those who have not followed every single detail of the Bill like those of us who served in Committee, like the Government intend, the Opposition would extend the current DLA required condition period from nine months to one year for PIP. However, the Opposition would extend the provision after receipt of the benefit, not at the beginning. To do otherwise would be to penalise unfairly those disabled people who need extra help associated with their disability early in their treatment.

Yet again, there is some confusion about the rationale behind the change in the waiting time for PIP. In Committee, the Minister said that the change was categorically not about savings. She clearly stated:

“I will be honest and open with my answer. I would like to reassure the hon. Lady”—

meaning me—

“that the principal aim of extending the qualifying period from three to six months is not about savings. We do not expect the measure to provide any significant savings.”––[Official Report, Welfare Reform Public Bill Committee, 10 May 2011; c. 848.]

Furthermore, I have asked the Minister in a series of written parliamentary questions what the projected savings are. Again, her Department was unable to provide any sort of answer—nor do its answers so much as allude to potential savings resulting from this policy decision—yet at Department for Work and Pensions questions on Monday, the Minister appeared to backtrack, stating that “modest” savings were now part of the reasoning for pushing ahead with the change. In her response today, will she indicate the scale of those modest savings? It is a little concerning that the rationale behind changes that will make such a big difference to the lives of many disabled people in this country is, even at this late stage, being cobbled together by the Government.

If we cannot comment on savings from the policy, we can at least discuss its impact on disabled people who require PIP to help them to meet extra costs associated with their disability. In Committee, we discussed in great detail the different conditions that are likely to require early support, so I will not go into them in great depth today unless pushed to do so.

[Jim Shannon]

The hon. Lady has clearly outlined the issues in relation to the qualifying period. Is she aware, as many in the House are, that for people in poor health, it is a time of stress and anxiety? The Government are talking about increasing the qualifying period when people are under the most pressure regarding their health, so putting them under additional, financial pressure. Does she feel that such financial pressure will impact on people’s health at a time when they need less pressure and more help?

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[Mr Tom Clarke]

I very much regret that the Minister did not give way to me on the one occasion that I asked her to do so, particularly because I had planned to ask her to make an apology. I also invite the Secretary of State—if he would just listen to the debate for a moment—to join in making that apology to the 80,000 people living in residential homes who have been threatened since the comprehensive spending review with the removal of the mobility element of their disability living allowance.

I first raised this matter in a debate in Westminster Hall on 30 November. The Minister responded to that debate, so she cannot claim that she did not know what the issues were. In a moment, I shall talk about the remarkable review that very few people know anything about. People living in residential homes, and their Members of Parliament, can tell her exactly what the situation is, even in the absence of a review. We do not like the idea that 80,000 people have been led up to the top of the hill and marched down again as a result of the various approaches of the coalition Government.

[Jim Shannon]

Does the right hon. Gentleman think that this review has a pre-determined conclusion? Is he as concerned as the majority of Members are that it is only paying lip service to the issues and that it will therefore not deliver what we want to see happening?

[Mr Clarke]

I hope to come to that point later. I welcome the fact that hon. Members from Northern Ireland have played such an excellent part in these debates, both on 30 November and since. The hon. Member for North Antrim (Ian Paisley) made an intervention on that occasion, and his arguments were as sound then as they are today. The Minister has virtually no support for her position. In a moment, I shall discuss the disability organisations.