Poverty

Lord Kirkwood of Kirkhope Excerpts

Tuesday 15th June 2010 Lords Chamber

Tabled by

[Lord Kirkwood of Kirkhope]

To ask Her Majesty’s Government what are their proposals for tackling poverty.

[Lord Kirkwood of Kirkhope]

My Lords, it is a pleasure to sponsor this Question for Short Debate in your Lordships’ House. I start by declaring a non-remunerative, non-operational, non-executive directorship of the Wise Group in Glasgow, which promotes intermediate labour-market jobs for people on benefits. An important reason for having this short debate at this time is to try to get an early indication of how the Government are putting together their strategy for the longer term in terms of the new coalition Government’s programme.

I want to skim across four or five big issues. If the Minister runs out of time, as he did last week, I hope that he will resort to answering some of the questions that arise by correspondence. My first is a short-term issue, but it is signally important. At the moment there is a lot of concern in the poverty lobby about the short-term impact of the upcoming financial cuts and how that might impact on households with low incomes. I seek an assurance from the Minister that those who are most at risk will not bear the brunt of the upcoming cuts. Obviously, there have to be financial constraints. The Government and the country face a serious situation. The rhetoric being used by Ministers about “progressive cuts”, which seems a worrying oxymoron when you think about it, is important.

As I say, we need reassurance that those who are already poor will get some protection from the worst excesses of the austerity confronting the country, not just for the three-year period of the next Comprehensive Spending Review, but for a lot longer than that. In that regard, it is worth recalling that it is crystal clear that levels of household debt, as recorded in the Government’s own State of the Nation Report: Poverty, Worklessness and Welfare Dependency in the UK, are at an historic high. A lot of households out there, even those that are not poor, are carrying high burdens of debt that must be weighed in the balance. We know that the Social Fund was being considered for reform under the previous Government, and a consultation began in March. That the Social Fund is able to make short-term loans to financially stressed households is extremely important. Money advice is also important, and I know that plans were put in place by the previous Government that are essential to trying to get people out of some of this debt. I think that the Government should seriously embrace the prospect of restricting APR loan charges that are sometimes charged by loan sharks in this country at usurious rates to low-income households that have nowhere else to turn for short-term cash. Can we have reassurance that those most at risk will be given special consideration in the upcoming cuts?

I turn to my second issue. Although I think I know the answer even before I ask the question, can we have an assurance that the department will be robust in seeking from the Treasury investment resources for welfare reform? This is a longer-term point—I am talking about the next five to 10 years—that relates to some quite radical plans that Her Majesty’s former Opposition put together in documents such as Dynamic Benefits and others. They are indeed radical and certainly worthy of scrutiny and examination, but it is not reasonable to expect radical reform of that kind to be done at nil cost. People will get hurt and there will be a lot of losers if they try. I would like to think that a case is being made to the Treasury for the resources necessary to facilitate that reform.

Something that has always been a bit of a puzzle to me relates to my suggestion for finding money when money is scarce. The departmental report of the Government Actuary regarding the last benefit uprating statement states at paragraph 1.5 that:

“The balance in the”—

national insurance—

“fund at 31 March 2011 is estimated at £50.2 billion, or 63.8% of the estimated benefit payments (including redundancy payments) of £78.7 billion in the year 2010-11”.

That looks forward over the next 12-month period. As colleagues will know, the recommended balance in the National Insurance Fund is one-sixth of annual benefit expenditure. The figure of 63.8 per cent is not a sixth, so the Government have stored away a huge amount of national insurance contributions. The question is this: why do they not use this money in the short term to get some of us, particularly low-income households, through the immediate period we are facing? I hope that the Minister will go back to the department and ask that question robustly.

In addition, I suggest that the Minister looks at fraud and error for savings, as well as at administration costs. Between them those items cost £10 billion, which is a lot of money, so savings can be made. I want also to ask him about the longer-term plan for the department. I have mentioned the report Dynamic Benefits. What public service agreements can we expect for the upcoming three-year period starting in 2011? Do the new Government expect to bring forward any policy papers on this issue in the immediate future? Are there any Bills in prospect? What will the new Cabinet committee be doing? I am in favour of the new committee, although it is astonishing that it has not been set up before. What are its terms of reference, what will it do and what difference will it make?

Finally, who is doing what? I am a great fan of Mr Frank Field. I have known him for a long while and he is a very interesting character, but what on earth has he been asked to do? When will he tell us what he wants done, and what will we do with his advice when we get it? I ask that because the last time he tried, he did not get very far. It would be good to get an idea about the longer-term departmental strategy in this direction.

On child poverty, it is essential to know whether the framework in the Child Poverty Act 2010 will be continued, sustained and consolidated. We spent a lot of time in this House improving the Bill. It will provide a serious foundation between now and 2020 and I hope that its targets will not be interfered with by Mr Frank Field or anyone else. Can the Minister confirm that the statutory requirement is for the Government to set out their plans by March 2011? Can he give the House an idea of when the commission created by the 2010 Act will be set up and an idea of its terms of reference?

As to the working age strategy, there is some concern about the work programme and the kind of consolidated programmes it will bring. The cancellation of the existing New Deal programmes makes some sense but it took me by surprise that, as I understand it from a ministerial Written Answer last week, the Flexible New Deal phase 1 contracts that were set in place last October are also to be cancelled. So a whole raft of contract cancellation charges and costs could suddenly be visited on the providing community. How is that to be folded into the consolidated work programme in the future? I certainly expected phase 2 to be cancelled but the Flexible New Deal phase 1 cancellation is a surprise.

Related to that, the scale of the new providers for the new consolidated work programme will need to be much bigger than previously. They will need to have very deep pockets and be very big organisations to carry the weight of these programmes until they start producing surpluses in the long term. That is a matter of some concern. As to the terms of the work programme more generally, I hope that the viable work carried out by Professor Paul Gregg in setting up a personalised conditionality rating, which I absolutely support, will not be lost in the course of the rollout of the work programme in the longer term.

Finally—sometimes we all miss this important point; it is very easily missed—we need a society-wide response to poverty now. We suffer too much from the red tops taking a swipe at any family they think are pulling the wool over people’s eyes and swinging the lead—no doubt there will be some who do that—and they are castigated as scroungers and caricatured as no-hope people who hold the country back. We need a new paradigm for that debate. I hope that the new Government will look at all these issues and start building some more positive attitudes towards poverty reduction measures in the future. Unless we do so, we will not have a positive enough atmosphere to secure the kind of reform that we all want to see for our low-income households in future.