Budget Resolutions and Economic Situation
Karen Buck Excerpts(11 years, 1 month ago)
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Mr Byrne
I can confirm that, and I will also say to the House that families are now paying an extraordinary price. They are doing anything and everything to get work. On average, people have taken a £1,250 pay cut since the election, and that is why it is such a bad idea to cut tax credits and give a tax cut to millionaires in two weeks’ time.
Ms Karen Buck (Westminster North) (Lab)
We have heard a great deal in the Budget debate—not unreasonably—about public debt, but less about the private sector crisis that generated the public sector debt crisis. We have also heard about the impact of private debt and deleveraging, including from the hon. Member for North East Somerset (Jacob Rees-Mogg). In that context, it might be worth mentioning that private debt and deleveraging are connected with the substantial decline in the number of people who can afford their own homes because of house price inflation in the past decade. That feeds into the core of my argument on the extent to which housing and housing costs have led us to a crisis in the welfare state.
We have heard less in the debate about flatling growth, the crisis in unemployment and under-employment, and the crisis in real wages and living standards. It is worth noting that real wages fell by 0.7% last year, and that average earnings will have fallen by 2.4% over the course of this Parliament. That fall in purchasing power is contributing to the continued stalling of growth.
Unfortunately, housing costs are at the heart of the living standards crisis, particularly in respect of first-time buyers, younger people, and those in what we call generation rent. Home owners have benefited for a decade or so from low interest rates. The tragedy is that many people are not aware of the fact that low interest rates are sustaining lower mortgages. A third of home owners have interest-only mortgages, and are extremely vulnerable to a future rise in interest rates.
Shelter has demonstrated consistently the crisis in home affordability. Some 7.8 million people struggle to pay their rents and mortgages, and 2.8 million people rely on unauthorised overdrafts and payday loans on a regular basis to cover the cost of their mortgage or rent. With underemployment and the continuing flatlining of real wages, that situation will only get worse.
In turn, that has contributed to a dramatic rise in the number of people who are caught in generation rent—they cannot save for a deposit and cannot get a mortgage because of the high house prices we have seen for generations. Two million more people now rent in the private sector than 10 years ago—26% of all Londoners now rent privately. That driver into the private rented sector has led to an escalation in rents, particularly in London. London rents now average £2,200 a month. Naturally enough, people are unable to afford such bills. That explains why the housing benefit bill has risen. It is due not to Government policy, but to the increased case load in the private rented sector, together with unemployment and flatlining wages. The Government, despite their rhetoric, will spend £12 billion more in real terms on housing benefit in this comprehensive spending review period than the last Government spent under the previous comprehensive spending review. That was the figure before the Office for Budget Responsibility upgraded that expenditure this week.
If I were the Secretary of State for Work and Pensions, I would be furious that the Department for Communities and Local Government had driven up the bills of my Department through its housing policy, with the failure to build and the halving of the affordable housing investment programme, and its rents policy. However, if I were the Secretary of State for Communities and Local Government, I would be equally furious at the extent to which the Department for Work and Pensions policy of capping housing benefit had increased the pressure on my budget, particularly through homelessness. Today, we have heard about a further rise of 10% in homelessness, with an increase of 22% in London. That is not only a human tragedy; it costs money.
Will the Budget proposals address the crisis in housing and housing affordability? No, they will not. David Orr, the chief executive of the National Housing Federation, has said that if the investment had gone into affordable housing supply instead of the mortgage guarantee schemes, it would have delivered 175,000 new homes and a £30 billion boost to the economy. We know that the money is available because the Chancellor has secured £13 billion to underpin the mortgage schemes. Those schemes are effectively the rebranding of existing schemes that have not worked over the last two or three years. As other Members have said, the schemes risk inflating a housing bubble.
A consistent theme is emerging not only from the Opposition but from commentators on the right. Even the Daily Mail has said today, “Could the great state mortgage scheme be hijacked by the rich?” The answer is probably yes. It will be a boost to older buyers and second home owners, rather than the young. Mervyn King, of the Bank of England, has warned that the mortgage guarantee is not the answer to the housing crisis. It will stoke up house prices and continue to freeze younger homebuyers out of the housing market, which will keep them locked in generation rent. That will in turn lead to an increased housing benefit bill, which Ministers will scurry to try to cap.
The housing crisis is being exacerbated, not relieved, by Government measures. That has a fundamental impact on private debt, the banking crisis, in-work and out-of-work poverty, work incentives and welfare. The Government inherited an imperfect position on housing supply, but they are making it considerably worse. Beveridge and Keynes, those giants of post-war economics, knew that affordable housing was the key to—
Housing Benefit (Under-occupancy Penalty)
Karen Buck Excerpts(11 years, 2 months ago)
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Steve Webb
The structural deficit, which is the part of the deficit that does not disappear as the economy grows, was estimated to be approximately £80 billion. That is what we have had to tackle, regardless of the ups and downs of the economy. That is the core deficit that the Labour party left us to deal with—these are Labour cuts.
Ms Karen Buck (Westminster North) (Lab)
Will the Minister take this opportunity to confirm his own impact statement, which makes it clear that if this policy works and encourages people to downsize to smaller accommodation, there will be no savings? Will he explain to the House which of the two objectives he supports: saving money or encouraging downsizing?
Steve Webb
No, I am afraid that the hon. Lady is not correct in saying that. There will be a range of responses to this change, which I will run through later in my remarks. Some people will stay where they are and will pay the shortfall; some people will use a spare room for a lodger or for sub-letting; some people will work or work more hours; and some people will move. Our impact assessment has a range of modelling on how people will respond, but it clearly includes people staying where they are and paying the shortfall—that is where the saving comes from.
Welfare Benefits Up-rating Bill
Karen Buck Excerpts(11 years, 4 months ago)
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Mr Byrne
I suspect the hon. Gentleman feels that very keenly, as 7,500 people in his constituency are on tax credits. I think that the best way to bring the welfare bill down is by getting people into work. The tragedy with the Bill is that it fails the Ronseal test set out by the Prime Minister yesterday. It does not do what it says on the tin. We are told that this Bill is all about reducing welfare spending. Actually, if we put tax credits to one side, the welfare bill for the period covered by this Bill will not rise by 1%; it is going to go up by 4%. It will go up by £8 billion because the Secretary of State is doing so little to get people back to work.
The reality of the debate is that there is a Labour way to bring down welfare spending and there is a Tory way. The Tory way, aided and abetted by the Liberal Democrats, is to attack tax credits. The Labour way is to bring down welfare spending by getting people into jobs—jobs in which they will pay tax rather than sitting on the dole taking benefits. That is why we tabled our amendment. We think that it is right to introduce a bank bonus tax to get 100,000 young people back to work, and to reform pension tax relief to create a two-year limit on jobseeker’s allowance. We think that it is right to send the clear signal that anyone who can work must not, and will not, be allowed to languish or to live a life on welfare. That is the kind of tough-minded but fair policy that we now need.
Ms Karen Buck (Westminster North) (Lab)
We have heard many interventions from Government Members about the unsustainability of tax credits and top-up benefits for working families. According to the Government’s own impact assessment,
“households towards the bottom of the income distribution are more likely to be affected and have a slightly higher average change because they are more likely to receive the affected benefits.”
What does my right hon. Friend think is the reason for that statement?
Mr Byrne
I note that the impact assessment is based on assumptions very different from those that formed the basis of the Treasury costings in December last year. However, the Government cannot change the simple truth: this is a strivers’ tax pure and simple, and it will hit people on tax credits.
We oppose this strivers’ tax. We believe that welfare to work will not work without jobs, and the Bill does not create a single job. It creates a heck of a mess, and asks Britain’s working families to clear it up. I urge the House to oppose the Bill’s Second Reading, to strike a blow for Britain’s strivers, to send the Government back to the drawing board, and to demand from them a proper plan to get our country back to work.
Ms Karen Buck (Westminster North) (Lab)
Over the past hour and a half, the parties on the Government Benches have thrown various lines of argument into the mix, but possibly the most absurd is that the whole agenda and the Bill are about deficit reduction. That argument is already in tatters. We have seen the economic recovery deferred and a double-dip recession possibly turning into a triple-dip recession. The rate of reduction of unemployment has been so slow since 2010 that it will not return to pre-recession levels until 2019, and we have seen a systematic and structural increase in under-employment. It is no wonder that total expenditure on welfare, despite the protestations, has been going up.
Let us take one example about which there has been a great deal of sound and fury over recent years—the housing benefit bill. Over this comprehensive spending review period, this Government will spend £12 billion more on subsidising private tenants than was spent by the Labour Government during the previous CSR period, so let us not hear anything from the Government about their successes on welfare reform and reduction and our failure.
For the first time in decades we see more working than workless people in poverty—now a record 6.1 million. It is no wonder that the new head of the Secretary of State’s favourite think-tank, the Commission for Social Justice, told an interviewer:
“I would say we have missed in-work poverty”.
Yes, the commission did, and yes, the Government did, but rather than the Government facing the evidence, we have been subjected to a barrage of rhetoric about the people behind the closed curtains and the shirkers rather than the strivers.
Ms Buck
That is correct; I recognise that figure. We have seen from the Bill and the debate behind it a political debate and a set of wheezes that the Government think will pay off for them. The problem with wheezes is that they tend to fracture when they come into contact with reality. The Government cannot make serious money out of an assault on out-of-work benefits, whatever the Conservatives like to say. Just 3% of all welfare spending goes on jobseeker’s allowance. Indeed, all out-of-work benefits account for only 3% of GDP between them. The House of Commons Library advises me that if only out-of-work benefits were subject to the 1% cap, but in-work benefits were uprated as normal, 80% of the proposed savings would disappear. If one factors in the changes to the personal tax allowance, one finds that working people, as the Resolution Foundation demonstrated to us, take 60% of the hit.
If the Bill is passed, 2.5 million workless households will lose out by about £215 a year by 2016, and of the 14.1 million working-age households with someone in work, 7 million will be hit: 30% of all households will take a hit on their income because of this Government’s obsession with the tiny minority of long-term or multigenerational workless.
The distinction between those in and out of work is far less rigid than the Government would have us believe. That is an extraordinary piece of rhetoric, given that the universal credit, the centrepiece of the Government’s welfare agenda, is designed to blur the distinction still further, and it has that one significant advantage of seeking to do that. Millions of our constituents, in Conservative and Liberal Democrat constituencies as well as in Labour ones, churn between those states of being in and out of work. Last year there were between 244,000 and 357,000 new claims every month for jobseeker’s allowance, while between 242,000 and 370,000 left benefit every month.
It is a myth that the welfare reform agenda put forward by the Government is about tackling worklessness. It is an assault on low-income working families far more than on working households. It is an assault on both, and on very low-income families, but it is real and not mythical families who will be hurt as a consequence. It is real children who are at increasing risk of going to school hungry, as teachers unions are already reporting, and it is real children who will return to homes that cannot be heated by parents who cannot manage to balance all the bills.
We live in a country that apparently can afford tax cuts for millionaires but requires low-income, working families to go to food banks and pay their mortgages with payday loans. Every day in London 100 homes bust the £1 million value level, yet 70,000 children were homeless this Christmas. Today we should not be reducing the capacity of 9.5 million families and households across the country to pay their bills.
What the crash and its aftermath demonstrated beyond doubt was that the future cannot be like the past. We want everyone who can work to do so, we want that work to be secure and fairly paid and for the costs that consume an unsustainable element of people’s incomes to be reduced.
Barbara Keeley (Worsley and Eccles South) (Lab)
Did my hon. Friend notice that the Secretary of State accused Labour of having a new idea with our job guarantee? In fact, the pamphlet produced by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) on a job guarantee is dated January 2012. We have been discussing these ideas for more than a year.
Ms Buck
We have indeed been discussing these ideas. The future jobs fund demonstrated value for money in getting people back into work, but the Conservative party, which claims to like evidence, trashed it in favour of the Work programme, which, as we know, has been less effective than doing absolutely nothing would have been.
Without jobs, deficit reduction is doomed, however much the Government cheese-pare away at the income of the poorest. While housing and child care costs consume an ever-larger portion of the incomes of poorer families, work cannot pay and families cannot thrive. It is jobs, fair pay, affordable homes and good affordable child care that will get us out of the trap we are in, whether it is the trap we want to spring to get people into work or the trap of deficit reduction. The trap that the Government are setting today will catch 30% of households in a worsening squeeze on their incomes at the very worst time for them to be facing it.
Oral Answers to Questions
Karen Buck Excerpts(11 years, 5 months ago)
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Esther McVey
Should there be another adult in the house, that is then a separate household, so both have to be assessed separately. However, I reiterate the fact that those who are exempt from the cap include those on working tax credit, all households with someone who is in receipt of a disability-related benefit, war widows and widowers, and those in receipt of war disablement pensions. A lot of people are therefore exempt.
Ms Karen Buck (Westminster North) (Lab)
Ministers have repeatedly stressed that a household containing anyone in receipt of disability living allowance will not be affected by the benefit cap, but constituents of mine who have an adult disabled child are now being told they will be affected by the cap because the regulations appear to state that if a family has an adult severely disabled person living in the household, that person is not a member of the household. Please will the Minister clarify whether the benefit cap will apply to someone who is looking after a severely disabled adult child?
Esther McVey
I will reiterate what a household is: a household is a basic family unit, and for the purposes of paying out-of-work benefits that will be a single adult or a couple and children, so once another adult is in the house, that is a separate household. [Interruption.] That has been the definition for a very long time. However, in the instances the hon. Lady mentions, discretionary payments are available and will come to fruition. [Interruption.] There is no point in Opposition Members huffing and puffing. That is the situation, and an extra £30 million has been put in place for this. [Interruption.]
Disability Benefits and Social Care
Karen Buck Excerpts(11 years, 10 months ago)
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Ms Karen Buck (Westminster North) (Lab)
The economic crisis that engulfed the developed world in 2008 was not, of course, caused by the number of people on disability living allowance. Indeed, the proportion of the population on out-of-work benefits fell between 1997 and the beginning of the crisis. Although reform is needed, that point gives the lie to the suggestion that the scale of the situation required us to introduce the kind of measures that are causing such distress and grievance to hundreds and thousands of people with disabilities throughout the country, and leading to such a number of appeals. That is evidenced by the terrible e-mail that emerged from the Department for Work and Pensions today.
Rather than discussing benefits, I want to talk about the social care agenda because, unlike the situation with working-age benefits, we face an emerging crisis in that area. Over two years, the Government have failed to make progress on a way forward on paying for social care, which would be of value to those who need that care and their families who worry about them. In addition, several events that are unfolding, especially in local government, are undermining the agenda.
We have heard from the Government about scaremongering, but nothing can compare with the advertising campaign that ran in the preamble to the general election that featured gravestones alongside a warning about the “death tax” that Labour would apply to fund a social care programme. If there was ever an example of an inability to hold a constructive debate about such a major challenge facing our country, that was it.
The costs of care have been increasing due to a rise in the numbers of the elderly and people with disabilities, as a result of progressive and thankful improvements in medical science. Those costs will double from £14.5 billion today to £27 billion by 2030, and there will be a 100% increase in the number of people who have to pay for their own care.
Changes are taking place in the national health service. A consultation will shortly be held in my NHS region on the closure of five out of nine accident and emergency units as part of a reform to the health service that is designed to move people away from hospitals and into social care in their communities. In itself, that is a positive development, but only if that social care is available and affordable, and we are seeing that the opposite is the case.
On the Sunday before the election, the Prime Minister said on Andrew Marr’s television programme:
“What I can tell you is any cabinet minister, if I win the election, who comes to me and says: ‘Here are my plans’ and they involve frontline reductions, they’ll be sent straight back to their department to…think again.”
After the election—on 28 February 2011—the Secretary of State for Communities and Local Government told the House:
“If councils share back-office services, join forces to get better value from their buying power, cut out excessive chief executive pay, and root out overspending and waste, they can protect key front-line services.”—[Official Report, 28 February 2011; Vol. 524, c. 13.]
I will leave it to the House to decide whether there has been a complete lack of understanding on the part of the Prime Minister and the Secretary of State, or whether this is mendacity, but we know that there has been a £1 billion cut from social care in local government. Councils are front-loading a 28% cut in Government support and producing graphs of doom showing that care costs will swallow up so much of local government’s agenda in the next 15 years that councils will be able to provide only care and waste collection services.
A quarter of Westminster’s £52 million savings programme has come from adult and social care. Some 3,000 older and disabled people have lost care, while £15 million has gone by reducing meals for older people and day care for vulnerable people by 50%. An adult social care survey ranked my local authority as one of the worst in the country. Mr Ash Naghani, one of my constituents, told a local newspaper:
“The attitude before last year was how my council could help you to become more independent and contribute to society…since last year, it’s been as if I’m not important any more. All they are talking about is ways to cut down my care package to see how much money they can save.”
In addition to the cuts in social care, the removal of the taxi card from everyone above a benefit threshold has taken away independence from elderly and disabled people who cannot use public transport. Many of them have pointed out that their savings from a frozen council tax are heavily outweighed by the amount they must spend on travelling now that they are without their taxi card.
Times are tough and the pressures of an ageing population are inescapable. Not all needs will be met, but we must avoid denying what is going on. The Government, however, continue to be in denial about the impact of local government cuts on front-line services, in denial about the reality of more intensive means-testing, and in denial about the extent to which the drip, drip of scepticism about the reality of disability, especially invisible disability, is poisoning the atmosphere, and even feeding into hate crime and abuse.
Welfare Reform Bill
Karen Buck Excerpts(12 years, 3 months ago)
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Chris Grayling
There might be an element of that—it is difficult to escape that conclusion. The Opposition proposal would have more credence had it not been made at the 59th minute of the 11th hour. We should not take them seriously when they make such ill-thought out, last-minute proposals.
The Government are clear that average earnings are the right way to determine the level of the cap. We do not need the Opposition’s proposed independent body—another quango, I hasten to say—to tell us otherwise. The cap needs to be a single, national one for the policy to make sense. The Government will lay before the House a report on the policy’s impact evaluation after a year of operation.
Chris Grayling
I will give way one more time as the hon. Lady was on the Committee.
Ms Buck
The Minister knows that the Committee extensively discussed the impact of housing costs and their interaction with the cap. If a household loses income through the benefits system through no fault of its own, can it claim legitimately to a local authority to be statutorily homeless, in line with existing homelessness legislation?
Chris Grayling
I am sorry, but I simply do not buy the homelessness argument that Labour Members keep making. We are talking about a cap equivalent to a salary of £35,000 a year. Labour Members were vociferous 12 months ago when the housing benefit cap was introduced, but we have not seen the consequences of which they warned in the terms they used. I simply do not accept that somebody receiving the equivalent of £35,000 a year should be categorised as homeless and unable to find anywhere to live.
Much was said in the other place on the importance of child benefit. Let me make it clear that the introduction of a benefit cap will not result in a single household losing its entitlement to child benefit, which will continue—rightly—to be paid to the current recipient. That important principle will not change.
We are, however, changing another important principle: households on out-of-work benefits should not in future expect to receive unlimited financial support from the state. Like other welfare benefits, child benefit is funded by taxpayers. We therefore believe that it is right for its value to be taken into account along with other state benefits when applying the cap.
Ms Buck
Will my right hon. Friend help those Government Members to understand one simple fact: that housing support and council tax benefit are in-work benefits, and that—thanks to those benefits and the tax credits policy—it is virtually impossible for any household of comparable size and comparable housing costs to be worse off in work than on benefits? The whole system is constructed to avoid precisely that scenario. Will he also help those Government Members to understand that the impact of the cap hits not only Knightsbridge and Mayfair—the Government want to run the policy by anecdote—but outer London boroughs and suburbs, such as Enfield, Barnet and Brent, as well as Birmingham? Where will those households find somewhere that they can be priced into?
Mr Byrne
My hon. Friend did an extraordinary job of deconstructing the Bill as it went through Committee, and she is an acknowledged expert on this subject. Her point is absolutely right. The Minister was not able to confirm that somebody on £35,000 could receive, for example, housing benefit. I am reliably informed that that is, in fact, the case. Because the Government have not thought this measure through, we are now confronted with the extraordinary spectacle of a cap that appears to cost more than it saves. As was pointed out by the hon. Member for Shipley (Philip Davies), who is not in his place now, in some parts of the country that will not send the signal that people are better off in work than on benefits. Only the Government could have introduced a proposal that is, frankly, that much of a dog’s breakfast.
Let us take the cost side first. In this debate, we are in the happy position of not simply having to rely on costing an assertion made by Opposition Members. We are very grateful that we have got the analysis that was presented by our good friend, the Secretary of State for Communities and Local Government. In a blunt warning—not to just anybody, but to the Prime Minister’s Office—the principal private secretary in the Department for Communities and Local Government said:
“we think it is likely that the policy as it stands will generate a net cost”,
and that was before the Government burnt all the money that they have sent up in smoke just this afternoon.
A cursory glance at some of the scenarios that we will see in, for example, the constituency of the hon. Member for Cities of London and Westminster (Mark Field) confirms exactly what is going on.
Mrs McGuire
I will certainly not give way at the moment.
My hon. Friend the Member for Westminster North asked Ministers at the Department for Communities and Local Government what constituted under-occupancy, and they said that it was two spare bedrooms, whereas the Department for Work and Pensions has a far more restrictive interpretation.
Ms Buck
We know from the Government’s own impact assessment that under-occupation is a problem particularly, but not exclusively, in the north of England, and that overcrowding is a problem particularly, but not exclusively, in the south. Local authorities have legal duties to their tenants, and if somebody from Salford is seeking to downsize, local authorities in Doncaster or Hull are not permitted to take them because of residency qualifications. Will my right hon. Friend help me to understand something that the Government have completely failed to explain? How will tenants be able to move from one local authority to another?
Mrs McGuire
Frankly, I do not think the Government know how. The DCLG and local authorities certainly do not know.
Living Standards
Karen Buck Excerpts(12 years, 5 months ago)
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Mr Byrne
Perhaps the hon. Lady’s memory of history is suddenly faltering, because she should surely remember that in the Chancellor’s emergency Budget, borrowing turned out to be £20 billion less than my right hon. Friend the Member for Edinburgh South West projected when he was Chancellor. Unlike his, the Conservatives’ borrowing forecasts have come in £158 billion higher than originally projected. That means thousands of pounds more for every household in this country—and of course, the price of the consequences is being paid by the hon. Lady’s constituents. More than 7,000 families in her constituency are now seeing their tax credits cut to pay the higher bills of higher unemployment.
Ms Karen Buck (Westminster North) (Lab)
Can we turn from history to current affairs? One of the key messages from the Government was that they were going to make work pay. Following from my right hon. Friend’s argument about how additional spending is being generated because of the failure of their policies, would he comment on the fact that in-work benefits for working households, such as housing benefit for those in work, have risen by 42% since the general election, as 115,000 more households have been forced on to in-work benefits?
Mr Byrne
That underlines an extremely important point, and I hope that in the Secretary of State’s response he will say a little more about how he reconciles the “Budget” that we heard yesterday with his own honourable intention to ensure that work pays. Right now, in my constituency, I have working parents, especially women, coming to me and saying that they are now giving up work—because the Government are cutting benefits, meaning that it is no longer economic to work. Surely that cannot be right.
Oral Answers to Questions
Karen Buck Excerpts(12 years, 5 months ago)
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Chris Grayling
I have been very encouraged by the participation of employer groups and the TUC in the Löfstedt proposals. The fact that we had people from both sides of the employment and political spectrums supporting the report at this morning’s launch was a tribute to the work of everybody involved. It is a sign that we now have a cross-party blueprint for the future of health and safety in this country.
Ms Karen Buck (Westminster North) (Lab)
Since last May, an extra 155,000 working households have been forced on to local housing allowance—an increase of 42% on the previous year. Is that because rents have risen or because wages have fallen?
Mr Duncan Smith
As the hon. Lady knows, when we entered office we inherited a housing benefits system in a mess and local housing allowance was already spiralling —it has approximately doubled in the last 10 years—so she should look at what happened before as much as at what happens now.
Oral Answers to Questions
Karen Buck Excerpts(12 years, 9 months ago)
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Chris Grayling
I absolutely agree with my hon. Friend and want to see fewer cases going to appeal. This is one reason why we have stepped up the reconsideration process in Jobcentre Plus, so after the initial decision is made we actively seek out further evidence, if such evidence exists, and use it to reconsider our decision. I hope and expect to see the number of successful appeals reduce significantly as a result.
Ms Karen Buck (Westminster North) (Lab)
Local Jobcentre Plus officials have advised me that there is already a significant delay in the work capability assessment test in my local area because the assessments are taking around twice as long as was originally predicted. Can the Minister reassure the House that this is not the situation across the whole country and that there is no backlog in the work capability assessments, with all that that would imply for claimants and for the service?
Chris Grayling
We have remained on schedule to start the process for individuals. It is not the case that assessments are taking twice as long. There is an early element of bedding in for the personalised statement, as was recommended by Professor Harrington, but we are not aware of any long-term factors that would change the timetable for the whole reconsideration process.
Welfare Reform Bill
Karen Buck Excerpts(12 years, 10 months ago)
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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.
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.”
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.
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.
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.