APPENDIX 1
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 www.cabinet-office.gov.uk/regulation/1999/checklist/intro.htm).
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
www.dss.gov.uk/ba.
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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