Select Committee on Scottish Affairs First Special Report


Letter to the Chairman of the Committee from The Rt hon Dr John Reid, MP, Secretary of State for Scotland

As you know, the Select Committee published its report on Poverty in Scotland earlier this year. I was glad to give evidence to the Committee to outline the Government's approach to tackling poverty. We very much welcomed the final report and I now enclose the Government's response.

The report did, of course, cover both devolved and reserved matters. Jackie Baillie, the Minister for Social Justice in the Scottish Executive, wrote to me on 21 November with her comments. I am enclosing a copy of Jackie's letter, for your information.

I hope this is helpful. Please do not hesitate to contact me if you have any queries on our response.

30 November 2000

Memorandum submitted by the Scotland Office

The Government welcomes this report. The Government is committed to the reduction of poverty throughout the UK. The Government's second annual report on tackling poverty and social exclusion, "Opportunity for All", published in September 2000, reiterated our commitment to working in partnership with the devolved administrations, through the Joint Ministerial Committee (JMC) on Poverty. The Scottish Executive has responsibility for many policy areas which have an impact on poverty and social exclusion and has its own distinctive strategy for tackling Scottish problems. A partnership approach, embodied in the JMC, ensures that there is a joint policy agenda, with shared priorities for tackling poverty between the UK Government and the Scottish Executive, together with a sharing of best practice, and of the benefit of pilot projects and other innovative work.

It was fitting therefore that the Committee should consider the issue of poverty in Scotland in the round. This response focuses on those matters which are reserved to the UK Government, and detailed responses to the Committee's recommendations are set out below. Comments on those elements of the report which refer to devolved matters are set out, for the Committee's information, in the attached letter from the Scottish Minister for Social Justice.

Recommendation (a) paragraph 28

With devolution firmly in place the Benefits Agency must now regard the development of a separate database for Scotland as an important priority. This should include, after appropriate consultation on agreed definitions, a clear distinction between rural and urban areas, particularly as benefits take-up is known to be a particular problem in rural areas. We recommend that this action be taken as soon as possible. Furthermore, we consider it essential that specific Scottish statistics be kept for all relevant matters reserved to the UK Government. The UK Government has a duty to discover the impact of its policies on Scotland.

Recommendation (b) paragraph 31

We believe that the collection of more benefits data at small area level is a useful idea which would involve the co-operation of a number of agencies, including the Benefits Agency, the Employment Service, local authorities and the Scottish Executive who should work in partnership to make it happen.

1. In the fight against poverty in Scotland, important areas of policy have been reserved to the UK Parliament, notably taxation, welfare benefits and employment policy. In such areas, UK departments and their agencies have responsibilities which extend throughout the UK (or GB), including for the collection of data to underpin the formulation and evaluation of policy. In principle, the Government expects such data in reserved areas to be collected and disseminated on a consistent basis through the UK (or GB), to underpin the development of UK (or GB) policies in such reserved areas. It also expects such data to be made available to the devolved administrations, subject to considerations of cost, to assist in the development of policies in devolved areas.

2. The Government recognises that proposals for improving the collection of data, for example, by establishing standard definitions or by using smaller area units may often need to be subject to consultation between Government departments and the devolved administrations. The principles under which administrations agreed to exchange such information were set out in the Concordat of Statistics in October 1999. Where appropriate these principles are underpinned by more detailed working-level documents such as Service Level Agreements. The DSS and Scottish Executive are currently preparing such an agreement.

3. In a number of areas, sub-sets of data for Scotland on reserved matters are already available. For example, the Inland Revenue publishes estimates of recipients in Scotland of Working Families' Tax Credit and Disabled Person's Tax Credit, split by Parliamentary constituency and by local authority.

4. Information on income patterns in Scotland is available, and published from the DSS Households Below Average Income data-set. The scope for detailed analysis of some groups is limited by sample size, as Scotland has a smaller population. Sample sizes are currently under review.

5. The take-up of benefits can be measured by caseload, and involves looking at either the percentage take-up (recipients of a benefit as a percentage of those entitled), or actual numbers receiving the benefit.

6. Information on the major DSS benefit caseloads and their general characteristics are available from 5% samples taken quarterly from the operational computer systems. In addition, client group analyses are available for the key benefits claimed by the working age population, based on the 5% samples. The 5% samples can provide spatial information at the all-Scotland level, split by each local authority in Scotland. Claimant counts by Parliamentary Constituency can also be produced for most benefits. This information is normally published within 4-6 months of the quarter end.

7. To allow information to be produced for smaller geographical areas, currently down to ward level, the DSS Information Centre is receiving information on all live claimants for certain benefits. These new sources presently cover Income Support, Jobseekers Allowance, Family Credit, Disability Working Allowance, Attendance Allowance, Disability Living Allowance, Incapacity Benefit and Severe Disablement Allowance at mid 1998 or early 1999. Tables for mid 1999 ward level data for the benefits listed above plus Child Benefit are currently in the final stages of completion. DSS Information Centre has undertaken to produce mid 2000 ward-level claimant data by the end of March 2001.

8. The DSS ward level benefits information forms an important part of the new Neighbourhood Statistics Database being introduced by the Office for National Statistics (ONS). This development follows the recommendations of the recent Social Exclusion Unit (Policy Action Team 18) report to improve the provision of neighbourhood level information in England. Future development work within DSS will concentrate on further improving the quality and timeliness of the data. ONS and DSS intend to consider how to cover the whole of GB on the basis of the findings of the PAT 18 work.

9. Percentage take-up statistics, as published by the DSS at Great Britain level, require estimates of numbers of entitled non-recipients. These have to come from the Family Resources Survey (FRS). They are vulnerable to sampling error, response biases, errors in reporting benefit receipt, and imperfections in our ability to model entitlement. At Great Britain level it is possible, with some difficulty, to make assessments of the possible extent of biases and errors, and produce figures for a range within which statisticians estimate true percentage take-up to lie. The samples taken are not adequate to allow for local estimates of percentage take-up. However, inspection of available evidence suggests that take-up in Scotland is broadly in line with take-up in Great Britain as a whole. The scope for producing take-up estimates at below GB level will be kept under review.

10. On rural/urban distinctions, the Committee are right to acknowledge the need for consultation on agreed definitions. For FRS-based statistics, we are faced with the problem that some local authorities are difficult to classify as either urban or rural, and it is not possible to go below local authority level. The Government will keep under review what contribution it can make to monitoring other urban/rural differences in Scotland.

Recommendation (c): paragraph 45

We believe a more cross-departmental approach to the provision of support mechanisms within the agricultural sector is required which would also necessitate a close partnership working between the Scottish Executive and the UK Government.

11. The UK Government is committed to close co-operation between Government Departments and the Scottish Executive in providing support mechanisms to rural communities in Scotland. The UK Government will work closely with the Scottish Executive as and when required. The Ministry of Agriculture, Fisheries and Food already works closely with the Scottish Executive Rural Affairs Department in drawing up and implementing agricultural policies.

Recommendation (d): paragraph 49

We are confident that the Scottish Executive will want to keep a careful eye on the cost of sea ferries and to ensure that islanders, particularly those with limited funds can make necessary journeys economically.

12. This is a devolved matter for the Scottish Executive.

Recommendation (e): paragraph 51

Calum MacDonald MP, has come up with an innovative scheme which we believe should be looked at closely. He wants the proposed new Highlands and Islands Transport Board to be enabled to sell petrol it has bought in bulk on the open market directly to retailers. He believes that this would save up to 10p per litre. The Highland Council currently does something similar with marine fuel, passing on cost savings to local fishermen.

13. This is a devolved matter for the Scottish Executive.

Recommendation (f): paragraph 60

The Scottish Executive might want to consider introducing and financing a remote living allowance, essentially to compensate for the higher cost of living, including fuel and travel, in remote or island communities. It could take the form of an additional grant allocation targeted at identifiable areas of need, which would be paid to local authorities and passed on directly to the community in the form of a reduction in council tax. Appropriate criteria would need to be drawn to ensure that areas and individuals enjoying relative affluence were not unduly subsidised.

14. This is a devolved matter for the Scottish Executive.

Recommendation (g): paragraph 71

The plight of the homeless is a disgrace to modern Scotland. Being homeless and ill without proper recourse to treatment is entirely unacceptable. We hope and believe that the Scottish Executive will treat the adequate provision of medical care for all sections of society throughout Scotland with the seriousness it deserves. This should include drug addicts who, according to a representative from Strathclyde Police that we met in Glasgow, are unwelcome on GP's lists.

15. This is a devolved matter for the Scottish Executive.

Recommendation (h): paragraph 73

Energy Action Scotland recommended a "detailed cost/benefit analysis of the impact on Scottish households living in cold damp homes versus warm dry and healthy homes". We hope that the Scottish Executive will undertake such an exercise, since any constructive conclusions will be helpful in a country whose climate tends towards the cold and damp.

16. This is a devolved matter for the Scottish Executive.

Recommendation (i): paragraph 75

The Scottish Executive is addressing the housing problem in Scotland. The question of housing stock transfer has been the cause of much topical debate. We would confine our comment to the call for decent and affordable social housing to be available.

17. This is a devolved matter for the Scottish Executive.

Recommendation (j): paragraph 76

As well as the call for an analysis of the impact on Scottish households of cold, damp houses, Energy Action Scotland also recommended a review of fuel poverty and energy efficiency in Scotland. We agree strongly with this.

18. The Department of Trade and Industry is leading an inter-departmental Ministerial Group on Fuel Poverty to develop a long-term strategy for tackling the problem. The work of the group covers Scotland and the Scottish Executive has been fully represented.

Recommendation (k): paragraph 85

We note that in two of its recent reports the Health Committee recommended an integrated health and social care system. We see this formal connection as overdue and inevitable if meaningful progress towards minimising health inequalities and developing a seamless care system is to be made. We would encourage the Scottish Executive to look very carefully at what it could do to bring about such an arrangement in Scotland.

19. This is a devolved matter for the Scottish Executive.

Recommendation (l): paragraph 86

We consider it may well now be time for the UK Government to take a serious look at the activities of licensed credit brokers. We deprecate the practice of banks, credit card companies and other financial institutions offering unsolicited credit facilities to vulnerable people, encouraging them to incur financial commitments which they cannot sustain. We are also concerned about the way some interest-free credit agreements are being operated.

20. The UK Government plans to begin shortly a review of consumer credit legislation. One of the aims of the review will be to consider whether the law needs updating to maintain an adequate level of protection against modern lending practices, including the way credit is marketed and sold today.

21. Research shows that people living on benefits make use of a range of credit sources. The Social Fund gives access to legitimate, affordable credit to those who might otherwise be prey to loan sharks and other expensive money-lenders. This complements the work of credit unions and other organisations working to overcome financial exclusion by providing accessible and inexpensive financial services.

Recommendation (m): paragraph 87

We urge the Minister for Communities to continue to support the establishment of a national telephone money advice service, with particular reference to difficulties associated with debt. To complement the hot-line, the Scottish Executive might also wish to develop the effectiveness of money advice services which are delivered into Scotland's poorer communities, seeking to reach the people who may not, for one reason or another, make use of the hot-line service. This will involve the allocation of extra resources as well as making better use of existing provision.

22. This is a devolved matter for the Scottish Executive.

Recommendation (n): paragraph 88

There is a need for local authorities to develop debt management strategies and we would encourage local authorities in Scotland to do so.

23. This is a devolved matter for the Scottish Executive.

Recommendation (o): paragraph 102

We recommend that the Government should promote with full vigour the development of credit unions, ensuring that, with appropriate safeguards for users, they can operate within a creative legislative framework, and thereby efficiently serve both individuals and local communities.

24. The Government believes that credit unions have the potential to make a greater impact in tackling financial exclusion. It is implementing a package of deregulatory measures, to remove some of the restrictions which are unnecessarily impeding credit unions' growth. At the same time, it will be enhancing their regulation so that in future credit union members will have similar protection to that enjoyed by depositors in banks and building societies.

Recommendation (p) paragraph 103

It is clear that an in-depth review of the working of the Social Fund and its impact on some of the most vulnerable sections of the community is long overdue. We therefore recommend that the Government undertakes such action now.

25. The Government reviewed the operation of the Social Fund after it came into office. It has radically simplified the Budgeting Loans scheme and removed unnecessary intrusive questioning, twice increased the Community Care Grants budget (previously frozen since 1994) and introduced specific help for homeless people and victims of disasters.

26. As a result, the discretionary grants and loans scheme helped around 82,000 more people last year compared to 1998/99 (25,000 of these were in Scotland). Around £26 million went to the poorest pensioners (including £5 million in Scotland) and around £530 million (including £73 million in Scotland) to sick and disabled people, the homeless, unemployed people, and families with young children. By 2001, the Government will abolish the capital limits in the Sure Start Maternity Grant and Funeral payments. This will ensure that families on low incomes with small amounts of savings receive support from the Government to help cover the costs associated with the birth of a new baby or the death of a close relative.

27. The Government recently announced radical reforms to the way in which benefits will be delivered. There will be a new, modern agency for benefit claimants of working age which focuses claimants on work, whilst ensuring that benefit is paid efficiently and accurately. The Agency will be formed from the Employment Service and relevant parts of the Benefits Agency. Within the DSS, there will be a new pensions organisation to provide a single integrated service for pensioners. The Government acknowledges the Committee's welcome for this initiative. The issue of how best to deliver help from the Social Fund once these new organisations are in place is currently under review.

Recommendation (q) paragraph 124

We recommend that the Government continues to increase the minimum income guarantee, particularly for those over 80 years of age, until it reaches a level commensurate with the minimum income standard to which we refer in paragraphs 150-152.

28. We agree with the Committee that there is no single or simple solution to eradicating pensioner poverty, and that pensioners form a particularly vulnerable group of people in society. However, trying to determine a minimum income standard for people, including pensioners, is very problematic.

29. What people need to live on varies greatly, depending on their needs, their age, and other forms of support that may be available. There is also an element of personal choice in how people spend their income. It is not possible to produce a single figure showing what is adequate in terms of income for all benefit recipients.

30. The DSS looks at a range of research into adequacy when setting benefit rates—they have commissioned a wide range of research into pensioners' incomes, lifestyles, attitudes and aspirations and will continue to do so. The difficulty is that research based on different methods often produce conflicting results, and there is no consensus on what is 'adequate'.

31. The Government's approach is to target help to those pensioners who are most in need, and at £78.45 a week for single pensioners and £121.95 for pensioner couples, the Minimum Income Guarantee (MIG) has got more money more quickly to over one and a half million of the poorest pensioner households. We are committed to maintaining the real value of the MIG over time, and have instigated the first ever National Take Up Campaign to ensure more pensioners receive their full entitlement.

32. But we know there is more to do:

·  we want to do more to tackle pensioner poverty by aligning the lower rates of the Minimum Income Guarantee with its higher rate. This means that the Minimum Income Guarantee will be increased to £92.15 a week for single pensioners and £140.55 for couples, by 2001. From 2003, the Minimum Income Guarantee will be raised in line with earnings.

·  the new Pension Credit will tackle the unfairness faced by too many pensioners who are penalised for having modest savings or second pensions by rewarding them for their thrift. It will get extra help not only to the poorest but also to those pensioners who have yet to share enough in the rising prosperity of the country. The Pension Credit will rise in line with earnings.

33. The Government are also providing a range of other measures to help pensioners, including Winter Fuel Payments of £200 this year for households which include someone aged 60 or over, and Free TV licences for those over 75.

Recommendation (r) paragraph 128

The Government was right initially to concentrate on the poorest pensioners, but we recommend that it should now ensure at the earliest opportunity that the level of state retirement pension is linked to changes in national average earnings.

34. We are pleased to see that the Committee agrees with the Government's approach of concentrating on the poorest pensioners. However, raising the Basic Retirement Pension in line with national average earnings would, in the longer-term, be very costly, and would not provide any additional help for the poorest pensioners. By 2020, restoring the earnings link would cost an additional £15 billion a year. That represents a 50% increase in the current pensions budget. But crucially it would not solve the problem of those on low and modest incomes, and it would not help those with small savings and little growth in their incomes when they retire.

35. The Government has put in place a comprehensive strategy to tackle pensioner poverty. This targeted approach ensures that more help is directed towards those pensioners that need it most, rather than seeing any increases clawed back as a result of the way that income-related benefits are calculated.

36. The combined effects of the MIG, Winter Fuel Payments, and free TV Licences for those over 75, (see recommendation (q) above), mean that a single pensioner is over £8 per week better off in real terms since 1997, and couples on MIG will be at least £11 per week better off. By April 2001, all MIG households will be at least £15 a week, or £800 a year, better off in real terms as a result of Government measures since 1997. A real terms rise in living standards of at least 17%. In addition, all recipients of the state pension will benefit from an above-inflation increase of £5 a week for single pensioners and £8 a week for couples. The current rates are £67.50 (single) and £107.90 (couples). A further rise in 2002 takes the overall weekly rate to £75.50 and £120.70 respectively.

37. Our policies have already ensured that pensioners on the lowest incomes are receiving more than they would have received from linking the basic state pension to prices or to earnings. But now we are going further, doing more for those on low and modest incomes. We are taking steps to improve the situation for those on low incomes who have some sort of second pension, or a small amount of savings, and get nothing extra from the state. We have doubled the lower capital limits in MIG and increased the higher limit from £8,000 to £12,000. These rules come into effect next April and as a result, half a million pensioner families will gain an average of £5 a week.

38. The next stage of our reforms is to introduce a Pension Credit, which will go much further—by abolishing the capital rules, and by creating a reward for saving. On top of the MIG, for every pound saved, pensioners receiving the Credit will get a cash addition. This will provide them with a higher weekly income than if they were relying on the MIG or on their savings.

39. The Government will be spending £4.5 billion extra a year on pensioners from next year, and over £5 billion extra in 2002/03. This will be over £3 billion more than if the state pension had been linked to earnings over this Parliament.

Recommendation (s) paragraph 133

We recommend that the Government looks very carefully at how best it could further promulgate advice to pensioners and maximise take-up of benefits. Pilot projects of the type we have suggested should be tested in both urban and rural areas settings. It should be prepared to finance any appropriate service. A simple first step would be to ensure both that a full benefits check is offered to all people of retirement age, and that they are encouraged to take up that offer.

40. The Government is committed to taking action to encourage eligible pensioners to claim their entitlement to the MIG and we estimate that around 500,000 pensioner families are missing out on their entitlement.

41. All the evidence shows that there is no straightforward way of increasing take-up. Research was conducted, including a pilot take-up scheme, which revealed that stigma, dislike of entering Benefit Agency offices, and the complex nature of claim forms contributed to non-take up.

42. DSS have therefore instigated the first ever National Take-Up Campaign by central government, which addresses all of these issues. Pensioners can now claim without having to leave their homes, by calling the new Tele-Claim Centre's free phone-line service (0800 028 1111), and they will be able to speak to trained operators who can help complete the forms. By November 2000 there had already been around 600,000 responses.

43. The Benefits Agency recognise they need to ensure people have information about potential entitlements, and many local offices already provide outreach services through local communities. For example, in the Highlands and Islands, BA staff work with six community groups to deal with benefit issues raised by local people, and they were involved in one of the take-up pilots, in Glasgow and in Renfrew. BA District Managers are actively encouraged to work with local community groups, and a range of local activities is undertaken.

44. Offering a full benefits check to all people of retirement age is not necessarily the answer to low take up. Most people do claim their Basic State Pension—take up is very nearly 100%. At the point of claim everyone receives a form for Income Support as well. Take up for IS among pensioners is estimated to be from between 63% to 73%, and it is possible that many of those who do miss out, may do so because they become entitled later on in retirement. Take up campaigns therefore need to be carefully targeted.

45. We also expect the new Pensions organisation to play a key role in encouraging pensioners to claim their full entitlement. The Pension Credit will cut red tape and complexity, and abolish the most unpopular aspects of the MIG—the weekly means test and the limits on savings. By checking up at key stages throughout retirement, the new organisation will be able to offer advice about claiming an income-related benefit, encouraging greater take-up. The structure of the new organisation will also improve our ability to provide good quality services that meet clients needs, and avoid the stigma that many older people attach to claiming an income-related benefit.

Recommendation (t): paragraph 136

We would hope that the Scottish Executive might consider introducing a national concessionary travel scheme at the earliest opportunity.

46. This is a devolved matter for the Scottish Executive.

Recommendation (u) paragraph 137

To oversee service provision for the elderly population and to give due attention to their importance as a valued group we recommend that the Government should further consider appointing a Minister for the Elderly. In addition, or indeed, unilaterally, the Scottish Executive might wish to give serious consideration to making a similar appointment within Scotland.

47. The Government has always attached a high degree of importance to provision for the elderly population. It launched in 1998 the Better Government for Older People Programme, in order to find new ways of improving services for older people. The Inter Ministerial Group for Older People (IMG), also established in June 1998, has helped to ensure that older people's issues are at the centre of Government thinking on policy development and service delivery. In April 2000, the Prime Minister appointed the Secretary of State for Social Security as the Cabinet Champion for Older People to promote the needs of older people to signal the importance of these issues to the Government and to drive the work forward. Scottish Executive Ministerial appointments are a devolved matter for the Scottish Executive themselves.

Recommendation (v) paragraph 145

We recommend that the earnings disregard for disabled people should immediately be increased to a more appropriate ceiling, and that it should apply for a period of six months.

48. The Government is committed to improving opportunities and incentives for disabled people who want to work. It has introduced a number of measures to that end, including the introduction of Disabled Person's Tax Credit, the New Deal for Disabled People (which will be extended nationally from next year), the 52-week linking rule and the removal of the voluntary work restriction for people on incapacity benefits.

49. The higher disregard in the income-related benefits of £15 which applies to disabled people and other special groups will be increased to £20 a week from April 2001, (as announced in the Budget on 21 March) in recognition of the particular difficulties they may face in taking up employment. Disabled people will be able to earn four times the standard disregard.

50. The earnings disregard rules in the income-related benefits aim to encourage people to do some part-time work without creating a disincentive to take up full-time work or increasing their dependency on benefit. The higher disregards are intended to encourage people for whom full-time work may not be an immediate option to keep in touch with the labour market through part-time work.

51. The Government believes that in-work Disabled Person's Tax Credit is the appropriate way to support disabled people as they test their strength in the jobs market.

52. DSS are implementing a package of measures to help carers and the severely disabled on low incomes as part of their next benefits uprating. The three component parts are increases in:

·  the carer premium in IS/JSA of £10 above the normal uprating. This includes the extra £2 announced on 3 October as part of the package of measures for carers in Spending Review 2000. This increases the rate from £14.15 to £24.40;

·  Disabled Child Premium (DCP), which goes to families on IS/JSA (IB) who have a child in receipt of higher rate DLA or who is blind, will rise to £30;

·  Disability Income Guarantee (DIG). Increases in the enhanced disability premium of £5 for singles and children and £7.25 for couples takes the rates to £11.05 and £16 respectively. This means that when the DIG is introduced from April 2001 a single person will receive £142 while couples get £186.80.

Recommendation (w) paragraph 152

We consider it time for the UK to have a proper measurement of income adequacy and accordingly recommend that the Government commissions an immediate study, utilising the research already carried out by the Family Budget Unit at King's College, London and the Scottish Poverty Information Unit, designed to develop a minimum incomes yardstick which is sensitive to local conditions. The introduction of such a measure would demonstrate both a sense of fairness and the Government's commitment to overcoming poverty.

53. The Government understands why the Committee has suggested research in this area, but does not accept that there is a single research method that can be used to calculate a minimum income standard for all families. What people need to live on varies greatly depending on their needs and a range of factors. The Government believes that it is not possible to produce a single figure showing what is an adequate income for a family.

54. The Government considers a variety of research into adequacy when setting benefit rates and has commissioned a wide range of studies into incomes, lifestyles, attitudes and aspirations and will continue to do so.

Recommendations (x) to (bb)

55. These recommendations cover New Deal and employment issues: key areas in the Government's fight against poverty in Scotland. Employment policy, including the New Deal, is reserved. However the Scottish Executive plays an important role in the successful delivery of New Deal in Scotland. We provide responses below to each recommendation. However, the Committee may find it helpful to have some general comments before we respond to individual points.

56. The UK is a high employment country with an employment rate well above the EU average. Within individual areas, the spread of employment and unemployment is relatively even compared to the past. All areas have areas of high and low employment. The biggest differences tend to be within rather than between areas.

57. Unemployment in Scotland is low by historical standards, while employment is high and rising. ILO unemployment in Scotland is around the lowest rate since 1992 (when comparable data became available). The number of claimant count unemployed is falling with the current rate around the lowest since 1976. Total employment is rising. The number of people of working age in employment in Scotland is at its highest level over the period for which data are available (since 1960).

58. A key element of Government policy is about addressing this inequality to achieve employment opportunities for all. The Government's policies are generally 'individual' focused and would therefore respond to need wherever it existed. However, they do operate in close co-operation with area-based programmes, such as Action Teams for Jobs, to target disadvantaged areas. In addition:

·  Welfare to work helps those without a job back into the labour market and from there into employment.

·  Policies are designed to make work pay through various tax and benefit reforms (e.g. Working Families Tax Credit).

·  Policies are designed to encourage employers to consider the widest range of people for their vacancies—including the long-term unemployed, the economically inactive, people with disabilities, people from ethnic minorities and older people.

59. However, the Government accepts that there are certain areas of the country which need extra help to close the gaps in employment opportunities with the rest of the country. There are a number of locally focused initiatives which are concerned with boosting demand and creating jobs. As well as Action Teams for Jobs, these initiatives include Employment Zones. These locally specific policies are designed to boost the infrastructure and human capital of disadvantaged areas. National policies, such as the New Deal, tend to be concentrated in areas of labour market disadvantage because the individuals who need its help most tend to be in those areas.

60. In addition to providing targeted help to the groups most disadvantaged in the market, the Government believes it is necessary to provide an efficient system aimed at matching people with the jobs as they come up. The Jobseeker's Allowance and the work of the Employment Service are important in maintaining regular contact with job seekers and in obtaining and filling employer's vacancies. Initiatives aimed at giving a greater work focus to people on 'inactive' benefits (including the New Deals for the Disabled and Lone Parents and 'ONE') and the planned establishment of an agency for all people of working age on benefits are key elements in modernising the state's role in helping people get into work.

61. The role of the New Deal and other policies is to equip people so they can compete for jobs, and secure and stay in work. It is not about creating jobs for people but instead seeks to help employers fill their vacancies by raising the employability of the unemployed. The New Deal tackles the true inequalities in the labour market; the unequal opportunities that stem from exclusion from the labour market. Providing employment opportunities for all is the single most effective means of tackling poverty and social exclusion.

Recommendation (x): paragraph 156

We think it is important for the Government to keep an accurate record of subsequent developments in the working lives of New Deal participants. Such information should be placed in the public domain.

62. We are keen to follow the developments of young people who have taken part in New Deal and particularly to see whether or not they return to claim benefit. The New Deal database records whether or not a young person, after taking part in New Deal, subsequently returns to claim benefit. The database is the source of statistics on New Deal which are published and made widely available by distribution and on request. However, there are limits to such data as there is no obligation for New Deal clients to keep in touch once they have left benefits.

63. In addition, as part of the evaluation of New Deal, we have built a longitudinal element into both the qualitative studies and the large-scale quantitative survey. This will assess how the lives of the young people involved in the research sample are affected by their participation in New Deal. All evaluation reports are published and are in the public domain.

64. We have also commissioned further research that will strengthen our knowledge of the outcomes and destinations of those young people who have left the New Deal without telling the Employment Service (ES) where they have gone.

65. The Government is making more use of ES's administrative systems to monitor frequency and duration of spells in unemployment after participation, but this is only part of the picture. To understand movements in work we are examining whether there are ways in which the Inland Revenue can share the information it holds. As part of this work we would, of course, ensure that there would be safeguards to prevent the misuse of information.

Recommendation (y): paragraph 161

The six month engagement period for New Deal programmes should be an average rather than a maximum. In some cases participants would be able to move on within three months, in other cases it will take longer.

66. Each of the New Deal options was designed to provide a flexible mix of learning and work experience. We are committed to a programme of continuous improvement for the New Deal, and have been helped in this process by advice from the Scottish New Deal Advisory Task Force, who raised several of the issues highlighted by the Select Committee.

67. All aspects of the New Deal are kept under continual review. We have already:

-    realigned earliest entry to all options to two months so that young people complete Intensive Gateway provision prior to option entry, thereby enabling them to acquire the "soft skills" necessary to participate effectively (e.g. motivation, time keeping, and group working);

-    focused the options on work-based training and job search; and

-    encouraged employers to play a direct role in developing provision so that content is tailored to the needs of the local labour market and learning is consistent with employer expectations of job entrants.

68. We do not believe that the case for longer work related options has yet been established. At the same time, we recognise that the more disadvantaged young people require well tailored programme provision and we are keen to develop New Deal to increase its effectiveness in delivering that. With all development in New Deal design, we believe it essential to ensure that time spent on Options does not distance the young person from the labour market. We accept that all activities should wherever possible be work based or as close to work as possible.

Recommendation (z): paragraph 163

We recommend that so far as possible there should be parity between the various New Deal programmes.

69. Different client groups on the New Deal programmes have different needs. Focusing on the characteristics of clients enables help to be offered where it is needed most. The strength of the New Deal is that each programme is tailored to get different groups of disadvantaged individuals back into the labour market.

70. However, the Government agrees with the Committee's recommendation that the differences between the New Deals should not detract from their parity of esteem. All programmes share a common aim: to help disadvantaged groups move off welfare and into work.

Recommendation (aa): paragraph 174 and recommendation (mm): paragraph 224

We recommend that the Government should not be blind to innovation beyond that displayed by its assault on poverty through welfare to work programmes. Major diseases require intensive care; and there are areas of Scotland that, in our opinion, will not respond to the treatment currently on offer. Awareness of the nature of the problem and a willingness to invest public money in suitable job creation schemes should be a matter of priority. The jobs need to be sustainable in a globally competitive world and offer reasonable rates of pay to attract people from welfare to work; and,

The function of job creation cannot be left entirely to the market place. As Professor Sinfield has indicated, recent emphasis on individual responsibility has led to the neglect of the wider, structural causes of poverty. An innovative and radical strategy to develop quality jobs in areas of high and long-term unemployment is needed. The Government should not fight shy of following this route. At the very least a pilot project might be tested.

71. The Government has put in place a comprehensive strategy to improve employability and economic performance; a stable macroeconomic platform, policies to promote competition, innovation and enterprise, and, through active labour market policies—the National Minimum Wage, Working Families' Tax Credit and the New Deal—making work pay and helping people move from welfare into work. At a regional and local level, this is supported by specific policies to improve the operation of local economies. There are also programmes which aim to enhance skills and qualifications. In Scotland, these are the responsibility of the Scottish Executive.

72. The Government does not promote job creation schemes. However in Scotland, the Scottish Executive funds a number of programmes which aim to provide people with the skills and qualifications that they need to improve their employability. These may involve the creation of intermediate labour markets, though these should not be viewed as an alternative to a job in the open labour market but as stepping stones to such jobs.

Recommendation (bb): paragraph 176

We welcome the new Agency derived from the Employment Service and parts of the Benefits Agency which was announced by the Prime Minister on 16 March. Placing benefits and employment services under one roof can only lead to an improvement in efficiency and a better, more comprehensive provision for clients. We also would push strongly for intensive help and assistance to be given to those newly unemployed, in order to allow for a return to work as soon as possible.

73. We welcome the Select Committee's support for the launching of the new Agency. We believe a single agency will be more efficient and will have a better focus on clients. The New Agency will have a clear work focus which will open up opportunities for all and tackle the root causes of poverty and social exclusion. It will be an important element in modernising the state's role in helping people to get into work.

74. Around 250,000 people in the UK join and leave the unemployment count every month. The active benefit regime means that most people joining the count leave very quickly - over half within three months and three quarters within six months. Because so many people find other employment soon after they become unemployed, we generally feel that resources are used more effectively by concentrating on those that find it hard to regain employment (this year the long term unemployed accounted for 23.7 per cent of all unemployed in Scotland). Giving more intensive help to the newly unemployed risks using limited resources on those who may need them less.

75. However, in areas of high unemployment or those particularly dependent on manufacturing industries, large-scale redundancy can damage the functionality of the local labour market and impact on the entire community. We are currently exploring ways in which existing programmes can be extended and maximised to facilitate labour market flexibility and support inward investment.

The Committee also made a recommendation in paragraph 65 which the Government considers should be followed up.

We hope that the introduction of job clubs and job search training schemes, which we would regard as fundamental aids to long-term rehabilitation, can be swiftly taken forward by the Employment Service and the Prison Service acting in Partnership.

76. Responsibility for provision of Employment, Training and Education (ETE) in prisons lies in Scotland with the Scottish Executive. The Department for Education and Employment, through the Employment Service, provides help for ex offenders on release. Notably, 40 percent of young people on the New Deal have had some contact with the criminal justice system.

77. The Employment Service is keen to encourage co-operation between local agencies. It launched, with partner agencies, the Scottish Framework Document at Barlinnie Prison on 10 May 2000 with a view to improving the services provided to offenders on release and to giving them the opportunity to pursue ETE. The partner agencies are: the Scottish Executive, Benefits Agency, Scottish Prison Service, Scottish Enterprise Network, Highlands and Islands Enterprise, and the Convention of Scottish Local Authorities. The document sets out a protocol between prisons and the Employment Service which encourages appointments for New Jobseeker Interviews to be arranged in advance of the offender's release from custody thus speeding up their access to JSA and to help find work. The document builds on good existing partnership practice between agencies like the Scottish Prison Service and the Employment Service.

78. The recommendation suggests that those in prison are missing out on services which are 'already available' to the general public. This is not the case. Only when people have been registered unemployed for 6 months do they become eligible for ES jobsearch programmes like Jobclub. To level the playing field for ex offenders, time in custody counts towards the qualifying period of unemployment, so, depending on sentence length, they do not have to wait to become eligible when they are released.

79. The Government is concerned that more might be done to improve ex offenders' job prospects—not least because having a job is linked to a lower rate of re offending. The Home Office recently led work across all relevant Departments to examine the employment/housing barriers faced by offenders. The group has reported to Ministers. Although this work does not cover Scotland, some of the ideas might also be relevant in Scotland too. Also, the Social Exclusion Unit has been commissioned by the Prime Minister to look at re offending rates of short-term prisoners south of the border and will include the ETE as part of its brief. The report should be provided in Spring 2001 and again may provide ideas which could be relevant in Scotland as well.

Recommendation (cc) paragraph 180

We recommend that the Government initiates a carefully evaluated pilot project in Glasgow along the lines suggested by the City Council, with a view to establishing the worth and viability of disregarding the working families' tax credit as income for the purpose of assessing entitlement to housing and council tax benefit. At the very least the exercise would confer on a city which has witnessed many of the consequences of multiple deprivation a temporary boost to spending power which, with the multiplier effect, should have positive results.

80. Housing Benefit (HB) and Council Tax Benefit (CTB) are income-related benefits where the norm is to take income into account, especially where that income is intended to help meet ordinary living costs. To disregard Working Families' Tax Credit (WFTC) in the calculation of HB and CTB would result in provision twice over from the Government for the same basic living costs.

81. Disregarding WFTC in the assessment of HB and CTB would have an undesirable effect on work incentives. For instance, an increase in net earnings of £1 would result in a reduction of 55p in WFTC, 65p in HB and 20p in CTB. So the earner would end up 40p worse off.

Recommendation (dd) paragraph 186

We recommend that the Government be more alive to the need for some variety in the way local social security offices go about their business. This might involve local budgets and local autonomy. The arrangements should, whilst working within a well-understood framework, overall budgetary control and, of course uniformity of benefits, accurately reflect the needs of the communities they serve.

82. The Government believes that people who are reliant on income related benefits for their basic income should be treated fairly and equitably with the same level of provision across the country.

83. Local offices do have some flexibility in the operation of the Social Fund, which is a discretionary scheme. Non-repayable Community Care Grants are available to vulnerable people in adverse situations, and interest-free Budgeting Loans are available to help people manage more routine one-off expenses. As loan repayments are returned to the local budget this money is then made available in loans to others. This recycling means that more money is available to provide essential help to people in need. Local needs are taken into account in the allocation of Social Fund awards.

84. Local offices are expected to serve the communities in which they operate, by delivering services in a way that is most appropriate for that community. District Managers are actively encouraged to get involved with local community groups.

Recommendation (ee) paragraph 191

South Lanarkshire Council urged that the Benefits Agency Remote Access Terminal (RATS) which it utilises to ensure that the correct benefit is paid to the right recipient, should be adopted nationwide. We recommend that this should be the case.

85. There are currently over 400 local authorities (LA) with a Remote Access Terminal (RAT). For a number of operational reasons, placing these terminals in local authorities is more efficient and effective than putting them in benefit agency offices.

86. There is strong evidence that these RATs have had a positive impact on benefits processing efficiency. To build on this success, DSS plan to further improve this information flow by introducing a new Integrated Enquiry Service (IES). IES will be delivered via existing RATs but will be improved and more user friendly.

87. IES will also provide LAs with access to the Department's Central Index (DCI) of National Insurance Numbers (NINOs). Benefit assessors will be able to confirm identity, validate NINOs and help authorities to comply with section 19 of the Social Security Administration (Fraud) Act 1997. A limited number of specialist staff will be given much wider access to DCI so that they may undertake national searches with a view to trace fraudsters or debtors who have moved away. Trials of IES began in October 2000 with a view to starting national roll-out by the end of this financial year.

Recommendation (ff): paragraph 194

We would not advocate a formal policy of poverty proofing for each piece of legislation, although we would expect that as a matter of course due regard to the impact of the Government's and the Scottish Executive's legislative programmes on all sections of society was appropriately assessed.

88. The potential impact of proposed legislation on all parts of society should be considered as a matter of course by policy-makers involved in producing legislation. To this end, the Government is committed to developing an integrated system of impact assessment and appraisal that enables policy makers to take account of different issues and the needs and interests of particular groups in society. Cabinet Office has produced a policy-makers' checklist, an IT-based source of best practice guidance on the integration of a wide range of impact assessments into the policy-making process (the checklist can be seen at

89. In addition, Cabinet Office guidance on regulatory impact assessment already requires that policy-makers consider whether their proposals are likely to have a socially unacceptable effect or impose unfair costs on any particular group or vulnerable section of society.

Recommendation (gg): paragraph 204

Both the UK Government and the Scottish Executive have placed anti-poverty strategies high on their respective agendas. But they should both beware of over-enthusiastic, headline grabbing initiatives which have been developed without sufficient regard for those who ultimately are required to co-ordinate and manage the collective result. Over zealous actions which are ill thought through quickly become redundant and may prove to be costly.

90. The Government has placed anti-poverty strategies high on its agenda and will continue to do so: the recent publication of "Opportunity for All" emphasises this. The Government appreciates that when formulating policies there is a need to ensure that local authorities and voluntary organisations are not over-loaded and are fully consulted about possible new burdens. However, we do not consider that our anti-poverty policies can be described as over-enthusiastic or headline grabbing. It is important to ensure that policies are given appropriate publicity, not least so that potential beneficiaries, such as pensioners who might be eligible for the Minimum Income Guarantee, are aware of their entitlements.

Recommendation (hh): paragraph 207

We recommend that when a review of local government finance does take place, the cost of effectively tackling poverty is then carefully re-examined and re-weighted in any new formula.

91. This is a devolved matter for the Scottish Executive.

Recommendation (ii) paragraph 211

We recommend that the Government should introduce a take-up target for the DSS to encourage a positive outward-looking attitude to benefit provision. Too often it seems, in theory, if not in practice, that unclaimed benefits are regarded as a departmental bonus. The DSS should actively offer benefits advice to all claimants rather than wait for them to ask. The Government should also seriously consider contributing to the funding of independent welfare advice services.

92. Take-up varies between benefits and take-up activity therefore needs to be carefully targeted. For example, Basic State Pensions and Child Benefit attract almost 100% take up among eligible clients. But caseload take up of Income Support among pensioners is one of the lowest (ranging between 63% and 73%, figures are for 1997/98).

93. For this reason we have launched the first ever National Take-Up Campaign, to encourage pensioners to claim their full entitlement under the MIG (see recommendation (s) above). The Take-Up Campaign has received a high level of interest that has resulted in an increase in enquiries about MIG to both the MIG Claim Line and staff in the field.

94. Housing Benefit is another example of where take-up has been actively encouraged, and local authorities do a considerable amount of work in this area. Local authorities have a statutory duty to ensure that people with a potential entitlement to Housing Benefit (HB) and Council Tax Benefit (CTB) know about these schemes. In particular they are expected to notify tenants about the HB scheme when implementing rent increases or taking action on rent arrears; to take action to inform private tenants of the HB scheme; and to notify council tax payers about CTB. Caseload take-up of Housing Benefit is between 92% and 100%, and Council Tax Benefit between 77% and 86% (both 1997/98 estimates).

95. Benefit Agency and Employment Service offices actively promote increased awareness about all benefits and services, through dissemination of information to local groups and individuals. A wide range of leaflets and posters are made available, and trained staff are on hand to deal with queries. Information is also available through a number of telephone helplines, and on the Internet at

96. The local BA office is a very useful source of help and advice—it provides a full range of leaflets, and more specialist advice than other local services or groups. Help can be provided with the completion of claim forms, and interpreters can be made available within one working day where necessary. Many offices have staff with sign language skills, or can arrange for a British Sign language interview within one working day. Many of their leaflets are available in different languages, in braille, and on audio cassette. All offices give the name of a Customer Services Manager who can be contacted personally about provision of services. For people not able to get to the office, home visits can be arranged promptly.

97. The Government already contributes to the funding of independent welfare advice services provided, for example, through Citizens Advice Scotland. In addition, DSS has helplines which are independent from the local Benefit Agency district network. Welfare advice is also provided by voluntary sector community legal advice centres supported by National Lottery funding and local authority grants. In Scotland, this is principally the responsibility of the Scottish Executive.

Recommendation (jj): paragraph 216

We recommend that the Joint Ministerial Committee (Poverty) should produce and publish a clear statement of its agenda and objectives, along with a timescale for taking these forward.

98. Poverty and social exclusion cut across many areas of policy, and cannot be tackled in isolation. The UK Government and the Devolved Administrations believe that there is considerable scope for co-operation on the tackling of poverty across the UK. Accordingly, they agreed last year to establish the Joint Ministerial Committee (JMC) on Poverty, with the following terms of reference:

    "To consider joint or co-ordinated action by the UK Government and the Devolved Administrations to tackle poverty and social exclusion; and to facilitate exchanging information and sharing best practice."

99. To date, discussions have focused on child poverty and pensioner poverty. However, as stated in the Memorandum of Understanding between the UK Government and the devolved administrations and the Supplementary Agreement on the Joint Ministerial Committee (see Cm 4806, July 2000), the JMC is a consultative body rather than an executive body and so any implementation of the outcome of its discussions is a matter for each of the participants.

100. As the Supplementary Agreement makes clear, discussions which take place in the JMC and its sub-committees must remain confidential, so as to permit free and candid discussion. Therefore it would not be appropriate for UK Government to publish the JMC's forward work-plan. However, as also stated in the Supplementary Agreement, there may be occasions on which the JMC will wish to issue a public statement on the outcome of its discussions.

Recommendation (kk) paragraph 220

As we have tried to illustrate, whilst there are similarities between Scotland and the UK in general in terms of the circumstances that demand the intervention of the social security system, there are also distinctive differences. Apart from being both helpful and efficient, it would have sent all sorts of positive messages about co-operation within the DSS itself and to other government departments if, historically, the Department had included a Scotland Office (or Scottish Office) representative on the Anti-Poverty Strategy Team. We recommend that this should now happen as a matter of priority.

101. The Poverty and Social Exclusion team is a small team, based in the DSS, which co-ordinates work on the UK Government's annual reports on poverty and social exclusion. It is not responsible for all policy matters relating to poverty and social exclusion. The development of key strategies for example on pensions, or benefit services, rests elsewhere in DSS.

102. In the course of its work, the Team regularly liaises with other government departments on the drafting of annual reports by means of a Steering Group, which includes members from the Scotland Office and officials from the Scottish Executive. There are also extensive links between people in DSS and other government departments, and Scottish officials, on devolution work, and on policy developments which affect people in Scotland.

103. Staffing arrangements are kept under review, and it may be that secondments could be a possibility in the future.

104. Together, the UK Government and the Devolved Administrations in Scotland, Wales, and Northern Ireland, have the common goal of eradicating poverty and promoting social inclusion. We are working in partnership through the Joint Ministerial Committee on Poverty, which includes Ministers from the UK and Devolved Administrations, to achieve this aim and to learn from good practice as we develop different approaches to tackling similar problems.

Recommendation (ll): paragraph 222

We request the House to instruct the Procedure Committee to re-examine the current situation as between the committees of this House and committees of the devolved assemblies, including consultation with the Scottish Parliament, with a view to facilitating, where appropriate formal joint meetings between select committees and committees of the devolved assemblies. That said, we acknowledge that the issue of privilege can in all probability be resolved only by primary legislation.

105. This is a matter for the House authorities.

November 2000

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