Welfare Reform Bill

Karen Buck Excerpts

Wednesday 15th June 2011 Commons Chamber

[John McDonnell]

I understand, and, coming from a local government background—both as a councillor and as a local government officer—I very much support the localist agenda of freeing up local authorities to do as much as they can to reflect the direct wishes of the local electorate. However, we are talking about people in severe poverty, and one of the overall duties of government at every level is to ensure that people in our communities are not put at risk as a result of that poverty. Therefore, there is a danger in the localist agenda, which I support, of allowing a free-for-all. Without establishing national standards and monitoring, we could have a number of local authorities failing to fulfil their responsibilities as we would wish. Although I agree with the hon. Gentleman that the local electorate should hold those authorities to account, we have unfortunately had numerous examples—I speak as an advocate of local government—of that mechanism for keeping local authorities in check not being effective, particularly on the detail of administering such schemes. I am sure that we can all cite examples of that on a cross-party basis, no matter who has been in control.

I am not talking about just my individual concerns. Virtually every organisation dealing with the poor in this country has expressed its concerns about this element of the legislation. My local citizens advice bureau has provided me with numerous examples—which I will not take the House through—of the benefits of both social loans, particularly crisis loans, and community care grants. I would like to take this opportunity to thank Heather Brown, director of the Hillingdon CAB, and all her team for their hard work. They have emphasised the need to explore all the implications locally and nationally before the Government leap into a new system.

Shelter and Crisis, the housing charities, have undertaken their own assessments of the process. Crisis surveyed 250 of its housing advisers. Numerous Members across all parties work closely with Crisis, and we have the greatest of respect for its work. That survey showed that 69% of clients used crisis loans for rent in advance, with 87% using them to help furnish their properties. In its briefing, which many Members will have seen, Crisis quotes one person as saying that unless we have a system that is at least as effective as the social fund, the effect on efforts to get people to move into independent accommodation would be “catastrophic”. Anxieties have been expressed across the board about the fact that we have not yet had that assurance.

I am concerned about the lack of analysis in the Government’s proposals of people’s needs. There is also a lack of detail on how the proposals will work. My worry is that poor and vulnerable people will be put at risk as a result. It therefore behoves us as a House in discussing this Bill, as well as the Government, to come forward rapidly with detailed proposals that have statutory backing, in order to assure our constituents and all those working in the field that we will have a system to provide emergency support to people who are poor and vulnerable, but not one in which local decision making risks diverting those resources away from where they are needed. It is on that basis that I have tabled this amendment for discussion. I hope that, as a result of this debate, we will at least gain a clear understanding of how the Government are going to address these issues—and address them fairly urgently—given that they are causing considerable concern.

[Ms Karen Buck (Westminster North) (Lab)]

I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on the way in which he has introduced this group of amendments. His amendments and those tabled in my name cover much the same ground. Like him, I am deeply concerned that the Government propose to remove the discretionary element of the social fund without giving us a great deal more clarity about how the poorest and most vulnerable will be protected, about the adequacy of the replacement system, about the protection of vulnerable people without a local connection—a matter to which I shall return in a moment—and about the lack of a proper system of review. As my hon. Friend rightly said, the numbers involved are significant, with 640,000 applications for community care grants and 3.6 million applications for crisis loans. We are not talking about a modest amount of money, and those figures represent a great deal of need. He also suggested that they represent only the tip of the iceberg of need. Of course we accept that there cannot be unlimited capacity to meet need, and it is clear that, were more resources to be made available, more need would come out and be met.

I want to pick up on a point that my hon. Friend made in response to an intervention. Despite the numbers of people who apply for and receive loans and grants under the discretionary grant, and the fact that when local government takes on this responsibility it will be accountable, in the spirit of localism, to its electors, we must recognise that the characteristics of people who seek assistance from the social fund do not make them a cohort of people that is likely to influence local politicians on a significant scale. This will tie into comments that I will make in a moment about what we should do with people with no local connection.

All the evidence that I and my hon. Friends have received from our law centres, citizens advice bureaux and other organisations shows that the claimants of discretionary social fund elements are very likely to be highly mobile people in a crisis that frequently severs their connections to the local community. They are not likely to be over-represented among those on the electoral register, or to wield a significant amount of local clout. They would not always need to do that; a good, responsive local authority will map and respond to their needs without it, but the reality is that, in a competition for scarce resources, that will not always be true of all local authorities.

We are completing the stages of the Welfare Reform Bill today, having been asked to make decisions on a number of important elements, which we discussed on Monday and are debating today, without having been given a great deal of substance or detail about how those elements will work. The Government called for evidence on the discretionary element of the social fund in February, but the consultation did not close until we were in the middle of the Bill’s Committee stage. That worries me. Yet again, the Government seem to be pushing ahead with their proposals even though we have not had a proper opportunity to reflect on the breadth of views and opinions of people with experience of and expertise in the subject.

The Minister might care to report to the House on what the responses to the consultation actually said. It would be nice if she assured us that all the responses would be placed in the Library. I think I can guess, however, that their overwhelming tone will be one of deep disquiet, and that they will be urging the Government to think again, which is consistent with the principles outlined by my hon. Friend the Member for Hayes and Harlington. As he said, almost all the organisations with expertise and specialist knowledge in the operation of the social fund have told the Government of their worries. Let us take note of who they are. They include: Age UK; the Association of Directors of Adult Social Services; Barnardo’s; the Child Poverty Action Group; Citizens Advice; Community Links; Crisis; Disability Alliance; Family Action; the Family Fund; the Family Rights Group; Gingerbread; Homeless Link; the National Housing Federation; Oxfam; Platform 51; the Prison Reform Trust; Save the Children; Scope; and St Mungo’s. I am sure that there are others.

Those organisations are the big society in action. In many cases, they provide complementary services to the social fund, and they are expressing their concerns about the Government’s proposals and about their capacity to deliver to the people who will need their services when the changes are introduced. If the Government are serious, as I have always thought they were, about the idea of the big society and about a partnership with voluntary and community organisations, surely the first principle must be to listen to what those organisations are saying. Let us take an example from that list. Oxfam has said:

“The Social Fund provides vital support for people in times of crisis. The government proposes to devolve much of this money to local authorities, but without any statutory duty on them to provide an equivalent system of protection. This runs the risk of driving people to use high-cost lenders, reducing their chances of managing their debts successfully. This is particularly important as Universal Credit constitutes a radical reform, and it is almost certain that its introduction will suffer from teething troubles. These are likely to cause significant need for emergency payments like crisis loans, just as they are abolished. The Social Fund needs to play an important role in protecting people during this transition, which further supports the need for a delay to the change.”

The Committee also heard directly from people who know more about the social fund in all its strengths and weaknesses—we know that there are some weaknesses in the operation of the existing scheme—than anyone else. They included Sir Richard Tilt from the Social Security Advisory Committee, who said:

“Community care grants are the bit I am most concerned about—£141 million. By the time that you have dished that out to 100 plus local authorities, there will not be a great amount of money at local level, and I think, as it is not ring-fenced, it is likely to disappear into other things.”

He also said:

“My view on all this is that we have a UK social security system and that, for the past 25 years, the discretionary social fund has been the ultimate, final safety net for the poorest and most vulnerable…I would argue for a UK safety net underneath it.”––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 82-3.]

Professor Kempson told the Committee, in respect of the role of local authorities:

“Some will provide a better service than we have now”.

I do not think that that is in doubt. There is excellent practice in local government. Like my hon. Friend the Member for Hayes and Harlington, I also came to the House after serving in local government and I am a great advocate of it. Professor Kempson said:

“Some will provide a better service than we have now; many will provide a worse service; and some, I fear, will provide almost no service.”

She also said:

“As I read it, there will be no ring-fencing, and I cannot even see that there is any proposal as yet to build in any form of accountability by local authorities. That is the very least that is needed.”––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 82-3.]

We know that the social fund has many flaws and has been subjected to scathing criticism from the Public Accounts Committee, the National Audit Office and others. I completely accept that those criticisms need to be taken seriously. The issue before the House today, however, is whether the Government’s proposal risks making things worse by entirely removing that essential safety net without addressing the genuine concerns of the present system. The Minister made it absolutely clear to the Committee that

“there is no expectation that local authorities will replicate the current scheme.”––[Official Report, Welfare Reform Public Bill Committee, 3 May 2011; c. 731.]

She is nodding at that. She made it clear that, when the discretionary social fund is removed, local authorities will provide a service equivalent to the present one. She said that this was not devolution to local government, but something fundamentally different.

Central to that is the fact that the Government do not expect local authorities to manage loan schemes, as happens now with the crisis loan scheme, and that as loan repayments were topping up the available resource through the current crisis loans, the capacity to provide an equivalent level of service through emergency funding is now severely restricted. The figure I was given was 84%, although the Minister told us in Committee that it was 50%—and I am happy to accept her correction. None the less, the cash sum as an annual figure starting from now that will be devolved to local authorities does not tell us much about the funding that will available for the equivalent level of crisis service once the scheme gets under way because that 50% repayment will very quickly fundamentally erode the value of the service. As we have heard, the likelihood is that it will drive people into the arms of the cowboy and high-interest lenders as well as into debt.

--- Later in debate ---

[Sheila Gilmore]

Is it not also the case that many of the arrangements for people to purchase second-hand furniture are increasingly set up as social enterprises, which are intended to recoup money and make a working profit to go back into the business, so they will charge people, albeit less than for new goods, as otherwise their enterprise will not work? In any event, if this were going to be free, it would have to be heavily subsidised by someone.

[Ms Buck]

My hon. Friend makes an excellent point. The Government’s mindset is an old-fashioned one. There is an excellent case for making better use of recycled goods as a commercial or social enterprise facility, but there is also a strong empowerment argument for letting individuals make their own choices with cash at their disposal to meet their needs appropriately. As my hon. Friend rightly says, in many cases, the vision we used to have of a charitable sector simply opening a warehouse into which people can go to choose whatever donated goods might be available no longer applies.

[George Hollingbery]

I would counterpoint that on the basis that it is entirely possible to imagine a financial arrangement between the charity and the local council in which the council uses the funds provided for the purpose to future-buy services from the charity, giving people free access under certain circumstances to the products provided. There are many different ways to skin this cat; I can see these arrangements working perfectly adequately.

[Ms Buck]

The problem is that once we start creating a necessity for such an arrangement to be run at every single local authority, we will also create the potential for a mismatch between the goods that people need, the goods that are available, the charities providing those services and the area in which they are available. That also risks setting up a completely bureaucratic system in every single local authority to do what the current discretionary social fund does.

[George Hollingbery]

I do not suggest for a moment that what I said should be a prescription nationwide. I said simply that it is easy to imagine an entrepreneurial solution that used the social fund to provide services locally that were administered by local councils but did not involve money changing hands.

[Ms Buck]

I will do a deal with the hon. Gentleman. If he supports our amendment, I will accept his point. There is some truth in what he says: there is some excellent practice out there and plenty of innovation in the local government sector, but it is not consistent across the piece. The amendment effectively says, “Do not abolish the discretionary social fund without piloting or without allowing a proper ability for local authorities across the piece to demonstrate that they have the capacity to do what needs to be done”. The hon. Gentleman might well have enough confidence in that, but it cannot be guaranteed. At the moment, there is absolutely no assurance that a consistent level of innovation, expertise and commitment is available in some, let alone most local authorities.

[John McDonnell]

In my constituency we have done just that. A furniture fund has been set up by a voluntary organisation that is partly contracted by different agencies, but it has taken us 10 years to get to that. Now, because of people’s change in circumstances as a result of loss of benefits, we are setting up an arrangement for food parcels, which are being distributed by religious organisations. It is, however, extremely difficult, and it takes a long time to set this sort of thing up. My anxiety is that in the rush to legislate on this matter, none of the preparatory work has been done and there are considerable costs in setting these things up, particularly in the early years.

[Ms Buck]

That is an excellent point. As we have said so many times in debating this Bill, one does not necessarily disagree with some elements in principle—localism and the involvement of local government in shaping the response to local needs, for example—but these local projects take a long time and require investment to set up and they tend to come and go. In north Paddington, one of the most deprived communities in the country, two credit unions were set up over the last 15 years—with regeneration funding in both cases—but they have both collapsed. I do not want some of our most desperate and vulnerable people to be forced into reliance on a set of services that come and go, that might not be available and that might well collapse. I think credit unions are marvellous; I would like to see them flourish in all parts of the country, but they are much more vulnerable than people sometimes allow.

[John McDonnell]

Many of us have been through the same exercise that my hon. Friend described to establish credit unions, so the last thing we need at the moment is anything that destabilises our local credit unions. Loading this sort of responsibility on to them could undermine not only individual credit unions, but the whole sector.

[Ms Buck]

That is absolutely right. We need to carry on growing the local expertise and the local voluntary and community organisations, including credit unions, which need to come up with innovative and practical responses to help deal with our social problems. However, they are not a replacement, but a complement, and they have to be approached with a great deal of care.

[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.”

--- Later in debate ---

Amendments 39 and 40 would impose criteria set by central Government on arrangements to replace the discretionary social fund if it were abolished. Some of the requirements in amendment 39 are activities that we are already undertaking in our work on the replacement of the discretionary social fund. Other elements in the amendment would not be helpful to what the reform of the social fund is trying to achieve. As I said, in some ways the amendment misses the point of the reform, which is that local authorities are better placed to understand the needs of their local communities and to make sure that the money is getting through to the right people for the right activities.

[Ms Buck]

Why does the Minister think that almost every specialist organisation, voluntary group and charity in the field thinks that that is a problem? Is it because they do not understand it?

[Maria Miller]

The hon. Lady will know that we have had a call for evidence, and we will be considering the many different views of the organisations she mentions. We will of course want to work with those organisations to make sure that our policies work well. I remember some confusion in Committee about whether we were talking about the social fund or the discretionary social fund, so perhaps we need to make sure that people really understand our policy. Empowering local organisations at local level—the sorts of organisations that the hon. Lady named—to work with vulnerable groups in the individual community will, I think, be welcomed by many organisations on the ground.

--- Later in debate ---

[Priti Patel]

My hon. Friend is absolutely right. We are talking about taxpayers’ money, so we have to be resourceful.

I do not believe that Labour amendments 39 and 40 would make the delivery of the social fund more effective, and nor would they further support applicants and people in need. They would put additional bureaucratic burdens on the Government and risk delaying the implementation of the reforms. Amendments 53 and 54, which were tabled by the hon. Member for Hayes and Harlington (John McDonnell), would dogmatically block change by retaining the existing top-down system that is nowhere near as effective as we want it to be.

The hon. Member for Westminster North (Ms Buck) talked about several of the anomalies and dysfunctional problems in the social fund, as well as the National Audit Office’s criticism. Members of the Public Bill Committee know that the number of crisis loan applications has soared since 2006 from 1 million to 2.7 million, while more than 17,000 people have received crisis loans in the past 12 months. Given that such a significant number of people require multiple crisis loans, delivering the social fund locally will help to signpost them to support mechanisms, rather than encouraging the top-down approach that has been in place thus far. Many of the arguments put forward by Labour Members have been flawed and inaccurate, and I think that the amendments would be counter-productive to the Bill’s objectives.

[Ms Buck]

rose—

[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.