GOVERNMENT RESPONSE TO THE WELSH AFFAIRS COMMITTEE'S
THIRD REPORT OF SESSION 1999-2000, ON SOCIAL EXCLUSION IN WALES
(HC 365-I AND II)
Note: Paragraph numbers relate to the appropriate
paragraph in the WAC Report which includes the relevant recommendation
We ask the Government and the National Assembly
to ensure that young carers are given proper support and due recognition.
1. The Government shares the committee's concern
that young carers should get support and recognition for the vital
role that they perform in the community. In particular we want
to ensure that young carers, like all children, should be able
to have an education, to enjoy good health and to have leisure
time. There are a number of initiatives aimed at improving support
for this group of carers, and key policies are outlined below.
2. An important source of support services are available
through local authorities, who are required to identify children
with additional family burdens and to provide services that are
geared to ensure these children's education and general development
do not suffer. The Framework for the Assessment of Children
in Need and Their Families provides clear guidance on assessing
the needs of young carers and their families. In September 2000
Ministers announced an extension of the Carers Grant from
£70 million in 2001/02 to £85 million in 2002/03 and
£100 million in 2003/04 to enable local authorities to provide
a wider range of services to help carers, including the young,
to take respite breaks.
3. Children's Services Plans should set out
local support. The Carers and Disabled Children Act 2000
also makes provision for carers aged 16 and 17 to have access
to direct payments from their local authority to enable them to
be more personally involved in the provision of care for the disabled
person when considered appropriate. A new question in the next
census will provide more information on specific groups of carers
such as the young, to allow service planners to improve their
estimates of need for services in each area.
4. The Government is encouraging schools to develop
effective practice in meeting the needs of young carers, for example,
through link arrangements with young carers' projects. We are
also promoting awareness about young carers in schools through
Personal, Social and Health Education. We are also currently
looking at ways in which we can improve awareness training about
young carers for General Practitioners, primary health care teams,
social workers and teachers at the time of their initial training
5. Financial support is available to young carers
aged 16 or over, through Invalid Care Allowance (ICA) and
Income Support (IS). If entitled to IS they can also receive
the Carer Premium, which from April 2001 is being increased by
an extra £10 per week above the normal uprating.
We call on the Government to respond positively
to concerns about the operation of the Disability Discrimination
Act. It must be made clear that the social inclusion agenda extends
to disability in all its forms. (Paragraph 28)
6. The Government is determined to ensure that all
sections of society benefit from improved opportunities, and that
includes people with disabilities, and those who care for them.
Disability Rights Task Force recommendations
7. As the committee has commented, the Government
has included within the Special Educational Needs and Disability
Bill provisions to implement the legislative recommendations
of the Disability Rights Task Force on access to education.
These provisions end an anomaly in the Disability Discrimination
Act 1995 (DDA) and will offer new protections to disabled
people seeking equal access to education.
8. The Government has recently published its final
response to the recommendations made by the Disability Rights
Task Force, 'Towards Inclusion - civil rights for disabled
people'. This addresses all of the Task Force's recommendations,
which range from employment and education to the environment and
housing - and proposes further legislation in the areas of the
definition of disability, employment and access to goods, services,
facilities and premises. In particular the Government proposes
to end the small employer exemption by 2004 as well as some other
9. Improvements will be made to statutory guidance
and the Employment Code of Practice, to take account of
legislative changes proposed, and a number of recommendations
have been referred to the Disability Rights Commission, as part
of its role for monitoring and reviewing the DDA, for it to consider.
10. The Government will also be consulting further
on some other issues relating to the DDA in the light of the Employment
Directive under Article 13 of the EC Treaty.
11. The Government believes that these changes will
significantly improve the help and support available. They are
designed to increase job opportunities and tackle disadvantages
faced by disabled people and those who are longterm sick
who want to get work, or remain in work.
We must face the fact that people from ethnic
minorities, though long established in Wales, are excluded from
many important aspects of Welsh life. (Paragraph 29)
12. The Government considers the issue of ethnic
minority representation to be very important. The representation
of ethnic minority groups in bodies such as local government and
the National Assembly are both matters for the National Assembly
to address. However, we are determined to make the UK a successful
multicultural society and are committed to promoting and improving
race equality. We are taking various steps towards these ends,
- The Race Relations (Amendment) Act 2000, which
comes into force on 2 April 2001, outlaws race discrimination
in all public authority functions not already covered by the Race
Relations Act 1976, with certain limited and justifiable exceptions.
It also places a duty on public authorities to promote race equality
- to avoid race discrimination before it occurs;
- annually publishing race equality performance
indicators aimed at monitoring the contribution that public services
are making to race equality and ensuring that they are more adaptable
and responsive to the communities they service;
- introducing race equality employment targets
in the Civil Service;
- establishing race consultative and advice fora
such as the Home Secretary's Race Relations Forum, which considers
race equality issues across Government, and the Race, Education
and Employment Forum, set up by the Department for Education and
Employment, to consider and advise on all matters relating to
minority ethnic education and employment;
- harmonising where possible the provisions covering
race, sex and disability discrimination and strengthening the
CRE's powers to match those of the Disability Rights Commission;
- Agreed European legislation that outlaws discrimination
on the grounds of racial or ethnic origin in the fields of employment
and training; education; social protection; social advantages;
supply of and access to goods and services, which are within European
We urge both the UK Government and the National
Assembly to ensure that the views of those from ethnic minorities
be taken into account across the whole range of government activity
in Wales, and that projects designed to build the capacity of
those communities be properly funded. The commitment to an inclusive
and multicultural Wales must be more than mere rhetoric. (Paragraph
13. The issue of funding for local programmes is
a matter for the National Assembly. However, as a general principle,
the Government agrees that ethnic minority groups must have the
same opportunity to obtain grant funding as other groups. In June
2000 the SEU published the result of its study 'Minority Ethnic
Issues in Social Exclusion and Neighbourhood Renewal'. Although
not directly addressing Welsh issues, the report provides useful
examples of good practice and illustrates the importance of including
the concerns of ethnic minority groups in any programmes to tackle
poverty and social exclusion.
14. The Government has made a strong public commitment
to effect real change on race equality and has launched a new
race equality grant "Connecting Communities". The grant
has been used to support projects in England, Scotland and Wales.
15. The National Assembly for Wales was consulted
about the grant and organisations in Wales invited to apply. More
than £800,000 has been committed to five successful organisations
in Wales, including one which aims to build strong communities
at a local level. These projects will aim to effect real change
at grassroots level and help to eliminate social exclusion
It is essential that all public services in
Wales be available in both Welsh and English. (Paragraph 36)
16. The Welsh Language Act 1993 provides for
public bodies to draw up and implement Welsh language schemes
covering their services to the public in Wales. The purpose of
these schemes is to give effect, in so far as is reasonably practicable
and appropriate in the circumstances, to the principle that Welsh
and English should be treated on a basis of equality. Schemes
require the approval of the Welsh Language Board.
17. Most key UK Departments, agencies, crown bodies
and nondepartmental public bodies are already operating
Welsh language schemes, or have schemes in preparation. All Departments
are fully committed to developing and operating Welsh language
schemes, as and when given notice to do so by the Welsh Language
We welcome the growing awareness of the extent
of social exclusion in rural areas. It is vital that funding of
services, from both UK Government and the National Assembly, should
reflect the needs of rural areas. (Paragraph 39)
18. The Government recognises that improving core
services is a necessary part of programmes aimed at tackling rural
deprivation and social exclusion. 'Ruralproofing' of policies
is evidence of the government commitment that the needs of rural
areas are taken into account when policies are developed. We are
currently improving guidance on how to do this. This will include
those UK Government policies that affect Wales.
19. Government action already taken to reduce levels
of deprivation and social exclusion in rural areas across the
- £270 million package to maintain and modernise
the post office network, formally requiring the Post Office to
maintain the rural network;
- The National Minimum Wage, will particularly
benefit rural workers, where wages are likely to be lower. In
October 2001 the adult rate for the National Minimum Wage will
be increased to £4.10 per hour.
- For the financial year 200102 a total budget
of £6.3m has been made available for distribution to Welsh
local authorities to support transport services in both rural
and nonrural areas. Within the total budget, at least £3.6m
will be spent to support bus services and community or other unconventional
transport services in rural areas.
We share the Government's view that "Equipping
people with the education, skills and opportunities they need
to succeed at work and in life more generally is the key for preventing
social exclusion and tackling disadvantage at source". Education
and training are crucial in combating social exclusion. (Paragraph
20. The Government welcomes the Committee's support.
Improving education standards is a key part of our programme to
tackle poverty and social exclusion. For those without work, a
strong skills base provides access to a wider range of job opportunities
and a route back to employment. For those in work, it provides
a way of meeting changing job demands, providing greater job security
and improving incomes.
We support the aim of getting as many people
as possible into work, but we must face the fact that there are
many people who will not be able to work, be it for reason of
illness or disability or caring commitments. For many, the benefits
system will remain the only source of income. (Paragraph 49)
21. The Government agrees that, for some people,
work is not always an option. The benefit system aims to provide
security for those who, for whatever reason, are unable to work.
Financial support for people who are not available for work and
who do not have enough income to live on is generally provided
through Income Support (IS). We have significantly improved
support for families on Income Support. As a result of measures
announced in the last five Budgets, a couple on IS with two children
under age 11 are now nearly £1,700 a year better off. There
are around 77,000 families in Wales on Income Support or Jobseeker's
Allowance (IncomeBased) who will benefit from this extra
support. The support rate for under11s has risen by over
80% in real terms since 1997 and there are nearly 100,000 of these
dependant rates in payment in Wales.
22. In addition extra resources have been put into
support for people with a disability or long term illness. A new
Disability Income Guarantee (DIG) will be introduced from
April 2001. This extra support will be delivered by a new 'enhanced
disability premium' in IS, incomebased Jobseeker's Allowance
(IBJSA), Housing Benefit (HB) and Council Tax Benefit (CTB).
The new premium will be paid in addition to the existing disability
premiums that recipients may be entitled to, and rates will be
an extra £11.05 a week for a single adult or child, and £16
a week for a couple. There are expected to be around 10,000 beneficiaries
of this extra support in Wales in the first year.
23. There are also plans to improve provision over
the next three years for people who care for a disabled person,
including, from April 2001, an increase in the carer premium in
the incomerelated benefits by £10 on top of normal
uprating. There are 15,000 Income Support claimants with a carer
premium in Wales who will benefit from this measure.
24. For people in low income work with childcare
costs, the childcare tax credit, part of WFTC, helps with
70% of childcare costs, up to a maximum of £100 for one child
and £150 for two or more children. From June 2001 these limits
will be increased to £135 and £200 respectively. Provision
of childcare is a devolved matter.
25. In addition, help is provided through the New
Deals for people who want to work but have difficulties in
doing so, for example because of childcare or other caring commitments,
illness or disability. And the Disabled Person's Tax Credit
(DPTC) provides financial support for people with a disability
who can only work restricted hours or whose earnings are reduced
due to disability. DPTC will guarantee an income of £160pw
to a single person working full time from April 2001. For a person
with a child the amount rises to £246.
There is little justification for maintaining
a lower rate [of National Minimum Wage] for 1821 year olds.
... We call on the Government to extend the minimum wage regulations
to 16 and 17 year olds and to strengthen the enforcement of the
regulations. (Paragraph 51)
26. The Government welcomes the Committee's broad
endorsement of the National Minimum Wage (NMW).
27. The Low Pay Commission, set up to advise
the Government on an initial rate for the minimum wage and related
matters, is currently working on its third report. Its terms of
reference require it to continue to monitor the impact of the
minimum wage and to consider whether there is a case for increasing
the minimum wage rates, and if so by how much. On 5 March, the
Commission recommended an increase to the adult rate (to £4.10
later this year and a further increase to £4.20 from October
2002, depending on the economic conditions prevailing at the time),
which has been accepted by the Government. The Commission will
make recommendations on other issues by July 2001 and its researchers
will again include a study of the impact of the minimum wage on
young people. Any increase will take effect in October 2001.
28. The lower rate for 1821yearolds
reflects the importance the Government attaches to the training
and development of young people and to ensuring they can secure
jobs. The average wages paid to younger workers, who are often
in the process of gaining skills and work experience, have traditionally
Workers under the age of 18
29. In its first report, the Commission recommended
that 16 and 17yearold workers should be exempt from
the minimum wage, and that workers in the 1821 year old
age bracket should have a lower rate. The Government accepted
30. The Government believes that people below the
age of 18 should be concentrating on their education. We do not
wish to encourage young people to leave school prematurely with
the promise of relatively well paid employment. This view is echoed
in the Low Pay Commission's Second Report, which was published
in February 2000 (Cmnd 4571).
31. Without a good foundation of education and skills,
people are far less able to find work or to retrain and improve
their position in the labour market. It is important that we do
not do anything which might reduce employment opportunities for
We welcome the steps that are being taken to
encourage the utilities to treat their lowincome customers
more equitably. We urge the Government to set a timetable for
achieving fairer access to lifeline services. (Paragraph 52)
32. The Government is committed to tackling all forms
of poverty and social exclusion, and a number of measures have
already been implemented, which will improve access to important
33. The Utilities Act 2000 provides a strong new
focus on protecting the rights of consumers, which will be the
regulator's new primary duty. In fulfilling this new duty the
regulator will have to have regard to the needs of people on low
incomes, the disabled, people suffering from a longterm
illness, older people, and people living in rural areas.
Gas and Electricity charges
34. Ofgem, the gas and electricity regulator, produced
its report 'Social Action Plan: Report from Working Group on
Fuel Direct' in January this year. It aims to ensure that
consumers have a range of tariff options and payment methods to
suit their circumstances, and that energy suppliers provide appropriate
advice and help with debt management and energy efficiency. Changes
to licence conditions improve protection for disadvantaged customers.
As a result, gas and electricity suppliers will have to:
- offer their customers facilities to pay bills
in cash, fortnightly or more frequently;
- operate Codes of Practice setting out the services
prepayment (PPM) customers should expect, including distances
customers need to travel to recharge their meters;
- improve promotion of help available to customers
such as energy advice, and help to prevent disconnection for debt.
35. British Gas's prepayment customers for gas (who
are the majority of gas PPM users) pay the same rate as those
standard credit customers who have not received the discount for
quick payment. Continuing the downward pressure on prices will
directly benefit disadvantaged customers. And the maximum annual
premium which electricity prepayment customers pay has been fixed
at £15 for the Public Electricity Suppliers.
36. The Ofgem report also included proposals for
the Fuel Direct Scheme. It recommended that the Fuel Direct scheme
should be used more effectively to support vulnerable customers
who have difficulty paying their gas/electric bills.
37. The Fuel Direct scheme is available to people
on Income Support and incomebased Jobseeker's Allowance,
and protects claimants facing disconnection of fuel supplies,
by making deductions directly from benefits to the fuel supplier.
Ofgem and the DSS have accepted the Groups' recommendations for
more streamlined procedures, which should improve the operation
of the scheme, benefiting more vulnerable people.
Financial services & Payment by Direct Debit
38. The Cruickshank Review of Banking Services in
the UK, which was published in March 2000, looked into the issue
of bringing people without access to banking services into the
financial mainstream. It pointed out that by using a bank account
to pay utility bills by direct debit, people could save round
£50 a year.
39. Ofgem surveys have shown that many people prefer
to pay by prepayment meter, even where they are able to
pay by other means, because they find prepayment meters
more convenient or a help in budgeting. However, wider availability
of bank accounts should improve access to direct debit tariffs
for people on benefits and lowincomes, giving more choice
in methods of payment. Unlike Fuel Direct, direct debits can continue
after customers come off benefits. All the major banks now have
available basic bank accounts, which include a direct debit facility.
At present the benefits system allows people
to survive, but does not lift them out of poverty¼
We appreciate the cost to the Exchequer of a large increase in
the level of benefits and the economic barriers to achieving this
overnight. We do however believe that this should be an aim to
which the Government should be working in a defined timescale.
Lifting the level of benefits is central to tackling social exclusion.
40. While accepting that lowincome levels are
a key feature of poverty and social exclusion, the Government
believes that poverty is much more than just lack of income. Our
annual "Opportunity for All" reports (most recently
"Opportunity for All: one year on - making a difference"
Cmnd. 4865, September 2000) set out our strategy to tackle the
range of problems which contribute to poverty and social exclusion.
These include poor housing, health, access to employment and the
multiple problems of deprived areas. Since May 1997 there has
been a reduction of over 30,000 in the number of claimants of
key benefits in Wales. This has been reflected in the latest unemployment
figures that show too a reduction of over 30,000 in the claimant
count (from 7.0% in February 1997 to 4.4% in February 2001).
41. The Government firmly believes that work is the
best route out of poverty. Policies aimed at helping people back
into work, and making work pay (through the NMW and WFTC) are
therefore a key part of the government strategy. From April 2001
around 5 million low and middle income tax paying families will
benefit from the introduction of the Children's Tax Credit,
worth up to £520 a year. WFTC and the NMW guarantee families
with children and one person in full time work a minimum weekly
income of £214 from April.
42. However, it is recognised that, work is not an
option. Policies have therefore also been designed to ensure these
people have appropriate financial support. Targeted increases
in benefits have been implemented, to raise the incomes of those
most in need, such as pensioners, and families with children.
All families with children have gained from two successive above
inflation rises in Child Benefit. For pensioners, those
on the lowest incomes are being helped with the Minimum Income
Guarantee, worth over £8 a week more to 1.6m pensioners.
For those families who are not able to work as a result of a disability,
we have introduced the Disability Income Guarantee which
will help 130,000 of the poorest severely disabled people, ensuring
an income of at least £142 pw for a single person and £186.80
for a couple. And 30,000 families with severely disabled children
will benefit from an extra £11.05 a week for each disabled
child. In addition, we have increased the Disabled Child Premium
in the incomerelated benefits to £30, which is £7.40
more than the normal uprating. Carers will also benefit from a
package of extra help worth £500m over 3 years which includes
an increase in the carer premium in incomerelated
benefits by £10 above the normal uprating from April 2001.
For those families not in work, the IS allowances for children
under 11 have increased by over 70% in real terms since 1998.
As a result, a couple with two children under age 11, receiving
IS, are now nearly £30 a week better off.
We call on the Government to raise the level
of benefits overall and to consider the case for weighting benefits
By area according to the cost of living. (Paragraph 55)
43. The level of benefits is reviewed each year,
and they are generally uprated in line with inflation. Where appropriate,
additional targeted increases are implemented to provide support
for specific groups who are most in need, such as pensioners,
the sick and disabled, and those who care for them, and families
with children. A balance must be achieved between maintaining
work incentives, and protecting the incomes of the least well
Regional benefit rates
44. The Government does not support the idea of regional
benefit rates. The clear principle underpinning devolution to
the National Assembly for Wales, and to the Scottish Parliament,
is that the Government should retain responsibility at Westminster
for those functions which are best operated on a common basis
throughout Great Britain. This includes social security.
45. People who are in similar circumstances expect
to be treated in the same way, wherever in Great Britain they
happen to be living. This Government believes that people who
are reliant on income related benefits for their basic income
should be treated fairly and equitably, and that is one of the
reasons why we made it clear from the start that social security
would be reserved to the Government at Westminster.
We welcome the Government's recent review of
housing benefit set out in the Housing Green Paper published by
the DETR and DSS in April 2000. We recommend that the single room
rent restriction for Young people should be abolished, while measures
are taken to ensure that landlords do not exploit the system to
offer poor quality housing at inflated rents. (Paragraph 56)
46. The Government has accepted that the Single Room
Rent should be reviewed, because we accept that young people need
to be able to access reasonable accommodation, and be free to
devote more attention to finding work rather than worrying about
where to live. We have referred a proposal to the Social Security
Advisory Committee and to the Local Authority Associations which
broadens the current definition of the SSR so that it better reflects
what accommodation is available. Rent Officers have confirmed
that, in general, the market is active in providing shared accommodation
to young people. The proposed new definition therefore relates
to the cost of shared accommodation (that is, it includes the
use of a shared living room), rather than being confined to the
exclusive use of a bedroom, with shared use of a toilet and kitchen
as it is now. We plan to implement this change from July 2001.
Across Britain, around 65,000 young people will benefit from this
change for each of the next three financial years, at an annual
cost of some £25 million a year.
47. The Government agrees that safeguards are needed
against exploitation of the system by landlords. The Housing Green
Paper ("Quality and Choice: a decent home for all",
April 2000) put forward for consideration a number of suggestions
for using restrictions on Housing Benefit, or its direct payment
to landlords. The aim is to encourage the less reputable landlords
to improve the state of their stock and its management and to
tackle problems of antisocial behaviour by their tenants.
Despite some reservations by some respondents to the Housing Green
Paper, we have decided to develop benefit measures (in consultation
with key stakeholders,) linked to our proposals for mandatory
HMO licensing and selective licensing of private landlords. We
believe that restricting Housing Benefit, or its direct payment
to landlords, will prove an effective way to underpin a licensing
regime in low demand areas and target the worst landlords.
We welcome the proposal in the Treasury's PAT
14 report that the Social Fund should be reformed and extended
in scope. We also welcome the suggestion that access to the Social
Fund might be extended to those in lowpaid employment. ...We
call on the UK Government to review the operation of the Social
Fund. (Paragraph 57)
48. The Government reviewed the operation of the
Social Fund after it came into office, and introduced improvements.
- radically simplified the Budgeting Loans scheme
and removed unnecessary intrusive questioning;
- twice increased the Community Care Grants budget
(previously frozen since 1994);
- changed the allocation of loans budgets to achieve
greater consistency across areas; and introduced specific help
for homeless people and victims of disasters.
49. As a result, the discretionary Social Fund (which
covers Budgeting Loans, Crisis Loans, and Community Care Grants),
helped more people than ever before, with almost 2.2m awards being
made during 1999.00. In April 1997 the gross discretionary Social
Fund budget was £467.5m. Currently it is £626m, an increase
50. Some parts of the Social Fund are already available
to people in low paid employment. The Discretionary Social Fund
covers Crisis Loans, Budgeting Loans, and Community Care Grants.
Crisis Loans are already available to anyone experiencing an emergency
or disaster, irrespective of whether they are receiving a social
security benefit or not, where it is the only means of preventing
serious risk to health or safety. The Regulated Social Fund covers
Funeral Payments, Sure Start Maternity Grants, Cold Weather Payments,
and Winter Fuel Payments. Of these, Funeral Payments and Sure
Start Maternity Grants are available to people on Income Support,
incomebased Jobseeker's Allowance, Working Families' Tax
Credit and Disabled Persons' Tax Credit, and Winter Fuel Payments
are available to every household where one person is aged at least
60, irrespective of whether they are getting a social security
benefit. The Sure Start Maternity Grant, currently worth £300
will increased to £500 from April 2002, this increase will
be five times as much as the Maternity Payments that the grant
replaced in March 2000.
51. The Government has agreed to consider the Policy
Action Team (PAT) recommendation on the extension of all Social
Fund loans to those in lowincome employment.
We recommend that the Government reconsider
the denial of social security to recent immigrants who suffer
domestic violence. (Paragraph 58)
52. The Government would like to emphasise that people
who are granted indefinite leave to remain in the UK as a result
of domestic violence can claim social security benefits. This
includes those within the oneyear 'probationary period'
applicable to foreign spouses under immigration rules.
53. Those not granted indefinite leave, or those
whose application has not yet received a favourable decision from
the Immigration and Nationality Department, do not have access
to the benefit system. This is in line with the principles governing
benefits for people from abroad, and the government has no plans
to make any changes in respect of this category.
We urge the Government to ensure that its policies
for carers and disabled people do not deny financial assistance
to those over 65 years of age. (Paragraph 59)
Carers aged 65 and Over
54. The report of the National Carers Strategy
published in 1999 set out the Government's commitment to keeping
financial support for carers under review. We listened to what
carers themselves felt they needed and as a result last autumn
announced a package of measures to enhance the financial support
for carers provided through the Social Security System.
55. The package consists of proposals to:
- extend claims to ICA to people who first satisfy
the entitlement conditions from the age of 65 or later;
- increase the carer premium, paid with the income
related benefits, such as Income Support, by an extra £10
per week above the normal uprating amount;
- increase the earnings limit in Invalid Care Allowance
to a figure equal to the National Insurance Lower earnings Limit;
- extend entitlement to ICA for up to 8 weeks after
the death of the person being cared for.
56. The total package is worth in excess of £500m
over a threeyear period. The first two measures will be
implemented from April 2001 but the 8week runon and
ICA to those who are 65 or older require primary legislation and
they will be implemented as soon as Parliamentary time allows.
57. This represents the largest investment in financial
support for carers for many years and in particular represents
an acknowledgement by the Government of the role that older carers
play in the care of the severely disabled.
Disabled people aged 65 and over
58. Provision is already made for severely disabled
people over 65 through Attendance Allowance (AA), payable
to an estimated 1.3 million people (95,000 in Wales) at a national
cost of £2.9 billion in 1999/2000. Additionally some people
disabled before age 65 can retain both care and mobility components
of Disability Living Allowance (DLA) after that age.
59. Discussions are taking place with groups representing
disabled people about the possibility of longerterm changes.
The discussions will cover the fundamental structure of DLA and
AA and, in particular, whether improvements could be made within
existing spending levels to ensure greater fairness, consistency
and simplicity of operation. How best to meet the needs of those
disabled later in life will form part of these discussions.
People need the support of the benefits system
during the period of transition to work. It is to be hoped that
the Government's plans to amalgamate the Benefits Agency and the
Employment Service will help to improve this. (Paragraph 61)
60. The Government is committed to providing a range
of help and support to people who are moving from unemployment
into work, tailored to their specific needs, where possible. Support
through the benefit system is being improved for people who take
up jobs, and a range of initiatives have been announced, including
benefit runons, longer linking periods, and a £100
61. The establishment later this year of a new Agency,
which will bring together the Employment Service and the services
the Benefits Agency provides to people of working age, will radically
change the way the Government provides support to people of working
age. It will build on the initiatives already introduced to offer
a single, integrated service to benefit claimants of working age.
Personal advisers will provide advice and support, tailored to
individuals' needs, to help people overcome the barriers to work
and access appropriate benefits.
If people, and disabled people in particular,
are not to be discouraged from taking up work, they must be sure
that their benefits will be swiftly reinstated if they are unable
to continue in work. (Paragraph 62)
62. Claims to Incapacity Benefit (IB) separated
by a period of eight weeks or less link together and count as
one period. This linking provision allows claimants who leave
benefit, but whose health quickly breaks down again, to return
to the previous rate of benefit without having to serve a further
qualifying period. In addition it enables claimants with recurring/fluctuating
conditions to qualify for the long term rate of benefit by linking
together shorter periods of incapacity.
63. People who have been incapacitated for at least
28 weeks, who then began work or training, are able to return
to the same level of benefit if they leave work or training within
52 weeks. There is a further linking rule of two years which enables
people who have been on severe disablement benefit or the higher
rates of incapacity benefit to return to the same rate of benefit
if they have been in work or training for work and received DPTC
or a training allowance. The average clearance time for all IB
claims is 22 working days. We have no reason to believe that claims
under our new linking rules are not more than meeting this target.
We recommend that the Government introduce
a system of tapering benefits for people moving into jobs or selfemployment,
as a central component of its Welfare to Work strategy. We suggest
that the Irish model would be worthy of study. (Paragraph 63)
64. The Government has adopted a system of tax credits
that provide considerable support for those who move into work.
An element of tapering is involved, in that the level of tax credit
awarded reduce only gradually as earnings increase. For each family
there is a maximum weekly amount of WFTC payable depending on
family circumstances (age and number of children, number of hours
worked, childcare costs). If the families' total income is below
the tapering point (£92.80 from April 2001) they receive
maximum WFTC. If the total income is more than the tapering point
the maximum WFTC is reduced by 55p for each £1 of income
above the level.
65. The Irish model has been looked at, but the Government
believes tax credits are the best way forward, as it reinforces
the link with work rather than benefits.
66. From 2003 we will be introducing the next generation
of tax credits. We will bring together the different strands of
support for children in the WFTC, Income Support, Job Seekers
Allowance and in the Children's Tax Credit to create an integrated
and seamless system of financial support for children (integrated
child credit) paid to the main carer. For adults, we will create
an employment tax credit to be paid through the wage packet based
on the adult allowance in WFTC and DPTC.
67. Measures to be introduced later this year will
further ease the transition from benefits into work. These will
provide a variety of lumpsum payments and benefit runons
once a person enters work together with linking and rapid reclaim
if the job does not work out.
If the Government is to succeed in encouraging
skillbuilding, it must increase the level of benefits available
to those in training. (Paragraph 64)
68. Responsibility is devolved to the Welsh Assembly
for many of the areas relevant to the points raised in this paragraph,
for example post16 education and training, Work Based Learning
for Adults (including the amount people receive as a training
premium and for childcare costs); childcare funding, and Further
Education student support.
69. The Government does however provide opportunities
for full time education and training in Wales via the New Deals.
As research shows that most unemployed people secure work within
a relatively short space of time, the main focus of Government
support is therefore on helping those at a disadvantage in the
labour market on account of the length of their unemployment.
70. For unemployed people claiming JSA, the 16 hour
study rule provides a practical balance between allowing unemployed
people to undertake education while remaining on benefit, and
getting them into work as soon as possible. For courses funded
or partfunded by the Further Education Funding Councils
for England and Wales (from April 2001, the Learning and
Skills Council for England and the National Council for
Education and Training for Wales) full time education is defined
as involving more than 16 guided learning hours per week.
71. For other courses, a decision is made on a case
by case basis as to whether the course is full or part time. Those
who study part time are required to meet the normal JSA labour
market conditions of being available for and actively seeking
work. JSA is an active benefit providing financial assistance
to those whose prime aim is to obtain employment. It is not designed
to act as an alternative form of student support.
We recommend that the Government introduce
the benefit changes we are proposing in a few pilot areas, one
of them in Wales. These pilots could perhaps be based in the existing
Employment Zones. (Paragraph 65)
72. Introducing local pilots of changes to core social
security rules would be complex. Social security is a national
scheme, based on legal entitlements, and supported by national
IT systems that cannot easily accommodate local variations. Moreover,
as a matter of equity and fairness the Government does not support
the idea of regional or local benefit rates.
73. Where areabased schemes are tested out
this is done under tight legal powers, which allow the piloting
of timelimited benefit changes aimed at helping people get
or retain work. As such they tend to affect the rules surrounding
what people must do to be entitled to benefit, or the arrangements
for delivering benefit (as in the ONE or New Deal
pilots) rather than the amount payable or the categories of people
entitled. And pilot areas must be chosen with a view to effective
evaluation, not the wishes of any particular locality.
74. In the case of the existing Employment Zones,
DfEE already have a comprehensive evaluation programme in place.
Notwithstanding the issues outlined above, introducing additional
benefit changes would adversely affect this evaluation.
Staff employed to provide benefits information
on the telephone must be properly trained to give accurate advice.
Advice to callers in Wales must be available in Welsh. (Paragraph
75. The Government agrees that staff must be trained
to give accurate advice, and fully supports the provision of Welsh
language services for customers who wish to conduct their business
76. The BA Customer Charter states that customers
can expect full and accurate advice from staff, when they telephone,
write or call into a BA office. The Charter standards and customer
satisfaction are measured annually, and the Agency is continually
attempting to improve service in this area. A range of customer
service and technical benefits training is available for staff
to ensure accurate benefits information is provided. During the
financial year ending March 2000, the BA spent over £54 million
on training and development of staff, a large part of which was
aimed at improving accuracy.
77. The BA operates a personnel strategy designed
to ensure that there are sufficient Welshspeaking staff
members to enable a bilingual service to be offered. The Welsh
Area Directorate of the BA has a group of staff, the Welsh
Language Unit, dedicated to language issues. They ensure that
the Agency adheres to the Welsh language Scheme and all
staff in the Directorate have training and guidance on the procedures
78. As a minimum this ensures that the number of
Welshspeaking staff is commensurate with the number of Welsh
speakers within the area it serves. A bilingual telephone greeting
is routinely given to all telephone callers to BA offices in Wales,
which informs them that they may use the language of their choice
when conducting their business. Welsh speaking customers will
be connected to a Welshspeaking member of staff.
79. If exceptionally a Welshspeaking officer
is not immediately available to provide benefit information to
a telephone caller from Wales, the telephone operator is instructed
to offer to take the caller's contact details and arrange for
them to be phoned back by a Welshspeaking officer.
80. Similarly, customers who call at BA offices in
Wales are made aware of the bilingual policy by the display of
posters, notices and literature. Welsh speaking staff will deal
with customers who wish to conduct their business in Welsh. Where,
exceptionally, this is not immediately possible, arrangements
are made for an appointment within 2 working days.
81. In addition, many of the BA leaflets, forms and
letters are already available in Welsh. Those which are not can
be translated by the Welsh Language Unit on request.
82. The WAC Report refers to difficulties customers
have reported in accessing advice in person at the ONE pilot scheme
in SouthEast Gwent. Whilst this scheme is piloting 'call
centre' approaches to some aspects of benefit delivery, 'facetoface'
interviews are available if the customer prefers.
We recommend that the UK Government conduct
a comprehensive national benefit takeup campaign, with local
office and telephone line support. The voluntary sector advice
agencies must be involved in the planning and delivery of this
campaign. If this is not thought sufficient, the National Assembly
might also consider its own campaign within Wales. (Paragraph
83. Takeup varies between benefits, therefore
takeup campaigns need to be carefully targeted. For example,
Basic State Pensions and Child Benefit (CHB) attract
almost 100% takeup among eligible clients. However we are
aware that a minority of Pensioners have not claimed the Minimum
Income Guarantee to which they are entitled.
84. To address this, the Government launched the
firstever National TakeUp Campaign to encourage
pensioners to claim their full entitlement under the MIG
scheme. Pensioners can now claim without having to leave their
homes, by calling the new TeleClaim Centre's free phone
line service (0800 028 1111), and they are able to speak to trained
operators who can help them complete the forms.
85. We expect the new Pensions Organisation
to play a key role in encouraging pensioners to claim their full
entitlement. The structure of the new organisation will also improve
our ability to provide good quality services that meet client
needs and avoid the stigma that many older people attach to claiming
an income related benefit. Similarly the new Working Age Agency
will aim to deliver an effective service to its customers, ensuring
that unemployed people receive what they are entitled to.
86. More generally, the BA recognises that they need
to ensure people have information about potential entitlements,
and many offices already provide outreach services through local
communities. 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. BA District Managers
are actively encouraged to work with local community groups and
a range of local activities are undertaken.
87. Local authorities have a statutory duty to ensure
that people with a potential entitlement to Housing Benefit and
Council Tax Benefit know about these schemes. In particular they
are expected to notify tenants about the scheme when implementing
rent increases or taking action on rent arrears.
Since the Benefits Agency and other government
bodies are keen to advise claimants to seek advice from local
CABx, it is reasonable that the Government should contribute to
the costs of providing an independent advice service. We recommend
that the Government develop a properly structured funding strategy
for ensuring that the costs of a local benefits advice service
are met. (Paragraph 69)
88. The Lord Chancellor's Department launched the
Community Legal Service (CLS) in April 2000. The aim of
the CLS is to provide better access to advice and information
so that people are able to find out about their legal rights,
how to enforce their rights effectively, and if they are in a
dispute, how it can be resolved.
89. The CLS is encouraging the development of local
networks of good quality advice services, based on meeting local
needs and priorities, and supported through the work of local
partnerships. These networks bring together Citizens Advice Bureaux,
independent advice centres, law centres, solicitors' firms, and
local authority services. These agencies deal with a range of
legal problems which most affect people's lives, including advice
on benefits and entitlement. The Government supports many of these
agencies, including Citizens Advice Bureaux, through the CLS Fund
and the contracts for services issued by the Legal Services Commission.
Over the next three years, the Legal Services Commission will
be spending around £235 million every year from the
CLS Fund on Legal Help, and this includes the provision of independent
legal advice and information on a person's entitlement to benefits.
90. The Legal Services Commission is working in local
Community Legal Service Partnerships with other key local players,
such as local authorities, the voluntary sector, and solicitors.
The Partnerships will ensure that we achieve much better value
for money from the different streams of funding in advice services,
and that services are targeted on meeting local needs and priorities.
We ask the Government to clarify whether it is
permissible for local authority departments to share personal
information for the purpose of increasing benefits takeup.
91. In it would in principle be possible to share
information in such circumstances, but specific cases would need
to be looked at in the context of advice from the Information
Commissioner, and lawyers.
92. The Data Protection legislation is in
place to protect the rights of individuals in terms of the data
held on them and what the data controller does with it. The Data
Protection Act 1984 in itself does not impose duties of confidence:
rather it incorporates duties that are contained in other statues
and in general law. So for example, the DSS can only disclose
personal data, or receive data from another organisation, where
this is permitted in law.
93. Data protection law requires that any processing
of personal information is fair and lawful. This lawfulness may
come about because a person has consented to the activity: there
is public interest in the disclosure sufficient to outweigh the
public interest in maintaining confidentiality; or there is a
statutory provision which provides legal authority. But, the lawful
authority does not just have to authorise the sharing or use of
information itself - the underlying function itself must also
be lawful and within the statutory functions of a body. For example,
in seeking to transfer data collected by one body to another for
a purpose, it is necessary to ensure that the respective bodies
can lawfully receive and otherwise process the data, and that
it will be processed securely.
94. In order to facilitate claims to benefit and
child support, and to promote integrated working between agencies,
the Welfare Reform and Pensions Act 1999 provided a framework
for the exchange of data between local authorities and the Benefits
Agency and Child Support Agency. More generally, data sharing
between the DSS and other bodies such as local authorities would
be assessed on its particular merits and appropriate steps taken
to ensure that the provisions detailed above are adhered to.
While maintaining the objective of minimising
fraud, the Government should make clear that the primary duty
of benefits office staff is to maximise takeup of benefits
by those who need and are entitled to them. (Paragraph 71)
95. The Government wants everyone to take up the
benefits to which they are entitled. However there is an obligation
to ensure that taxpayer's money is not wasted through fraudulent
claims and errors.
96. The strategy for tackling fraud and error is
set out in the DSS report 'A NEW CONTRACT FOR WELFARE: Safeguarding
Social Security' (CM 4276) - published on 23 March 1999. The
overall aim of the strategy is to have a benefit system that is
secure from first claim to final payment. It is only by making
fraud awareness a part of everyone's job that we will achieve
this. The implementation of this strategy means that an antifraud
focus is now integral to the work of DSS and its staff, as is
dealing with the wider agenda of error and incorrectness in benefit
97. The BA provides a customerfocused service
and encourages people to claim benefits they may be entitled to.
The Agency's aim is to pay the right money at the right time,
all the time to those who need benefit. In support of this, the
Agency aims to ensure easy access to benefit information and advice
for all its customers. One of the Agency's key Charter standards
is for staff to provide advice and information by telephone, letter
or in person that is accurate, clear, full and helpful.
98. Local authorities, which are responsible for
administering Housing Benefit (HB) and Council Tax Benefit
(CTB), have a statutory duty to take appropriate steps to
ensure that potential beneficiaries in their areas are made aware
that they may be entitled to these benefits.
We recommend that the UK Government review
the instructions and training given to the staff of the new Working
Age Agency in order to ensure that those seeking benefit are treated
with courtesy and respect. (Paragraph 71)
99. The Government believes that all staff providing
a public service should treat the people who use that service
with courtesy and respect. In developing the detailed training
for the Working Age Agency, we will draw on the experience and
expertise of the BA and ES staff, gained over years of providing
benefits and employment advice and support.
100. In particular, we will draw on the training
provided to personal advisers in the ONE service pilots and the
New Deal programmes. These programme have recognised the importance
of personal advisers being able to understand the problems which
individuals face and to provide active support tailored to their
needs and circumstances.
We welcome the increases in the basic pension
planned for the next two years. We will watch with interest to
see whether the combination of the Pension Credit proposals and
the Minimum Income Guarantee takeup campaign can ensure
that no pensioners are left in poverty in the future. If not,
we believe that it will be necessary for the basic state pension
to be increased in line with average earnings, or inflation, whichever
is the greater. (Paragraph 73)
101. The Government welcomes the Committee's support
for its proposals for increasing the basic state pension. But
increasing the basic state pension by average earnings is not
the best way to help the poorest pensioners. This year the Government
will be spending over £2 billion a year on the poorest third
of pensioners, five times more than the earnings link would have
102. Nearly 2 million pensioners are already receiving
the MIG, 115,000 of whom live in Wales From April 2001, improvements
to the MIG will mean that half a million pensioners gain an average
of £5 extra a week.
103. The introduction of the Pension Credit
in 2003 will help 5.5 million pensioners and pensioner couples.
We expect it will benefit all single pensioners with incomes up
to £135 a week and all pensioner couples with incomes up
to £200. Under these arrangements, single pensioners will
get a "savings credit" of up to £13.80 a week and
couples up to £18.60.
We support the proposed creation of the Post
Office Universal Bank, which will be particularly useful to very
many benefits claimants after the switch to automatic credit transfer.
However, we believe that the Government should clarify what alternative
simple money transmission system, accessible at post offices,
will be adopted to pay claimants who have not opened, or do not
want to open a bank account and therefore cannot be paid by automatic
credit transfer. (Paragraph 77)
104. The Government welcomes support for the proposals
for a Universal Bank. All major high street banks now provide
nocost basic bank accounts, available to anyone, in line
with the recommendations of the PAT report Access to Financial
Services (November 1999). Others are in the process of developing
such accounts. New Universal Banking Services are to be
set up, run through the Post Office network, providing access
to a basic bank account - into which benefits would be paid -
to anyone who wants it. Several high street banks have already
agreed to fund the new services.
105. The move to Automated Credit Transfer assures
a safe, convenient, more modern and efficient way of paying benefits
that fits within what people want. It is tried and tested technology,
already chosen by over one third of benefit recipients to access
their benefit payments via bank accounts. It will also give people
access to a wider range of banking and financial services, such
as direct debit facilities, which make it cheaper to pay some
bills. People who do not have bank accounts will still have the
option of collecting their benefits in cash at the post office
after 2003. We have given a commitment that people can continue
to collect their benefit cash at post offices as frequently as
they do now.
We recommend that the Government require banks
to conduct, and publish, social impact assessments before closing
branches. While this would not necessarily prevent branch closures,
it would at least ensure that the voice of the affected community
was heard. (Paragraph 79)
106. The UK Government shares the concerns of consumers.
The Government wholly supports the Cruickshank report's proposition
that knowledgeable consumers provide the best incentive for competition
to flourish, and has asked the Financial Services Authority
(FSA) to take forward work on improving consumer awareness.
107. The PAT report 'Access to Financial Services'
found that although banks have been rationalising their branch
networks for the last ten years, there has not been an adverse
effect on the Percentage of the population with accounts. However,
the Government will keep this under review.
108. The issue of branch closures is addressed in
the new Banking Code, and banks will now be required to
give at least 8 weeks notice before they close or move a branch.
In its response to the Cruickshank report, the Government stated
it would review the benefits to consumers of selfregulatory
codes, such as the Banking Code. The Government announced on 8
November 2000 that DeAnne Julius would chair the Banking Code
Review Group. This will examine the selfregulatory codes
to see if they deliver sufficiently strong benefits to consumers.
The review group is expected to report in April 2001.
While we endorse the Government's approach
of encouraging the banks to put their own house in order, it should
not hold back from regulation if this appears necessary. We welcome
the publication by the British Bankers' Association of an annual
report on promoting financial inclusion, and look to next year's
report for evidence of real progress. (Paragraph 82)
109. The UK Government shares the concerns of the
Committee about banking services in deprived neighbourhoods. It
does not believe that regulation is the way forward, however this
will be kept under review. The Government is firmly committed
to reducing financial exclusion among disadvantaged communities.
110. The Government supports the SEU approach, as
set out in its report on financial services referred to above.
- emphasising removal of unnecessary barriers;
- development of the right products;
- opening up of new delivery channels and consumer
- the provision of better information about banking
111. The Government response to the SEU report included
six initiatives to help people in disadvantaged communities excluded
from key financial services:
- an improved regulatory framework for credit unions;
- a new central service organisation to support
and enhance the role of credit unions;
- support for more widespread introduction of insurance
with rent schemes;
- exploring the possibilities for widening the
role of the Social Fund to help those in low paid employment;
- better access to counselling and refinancing
for those in debt;
- greater disclosure by banks of their provision
of services to the socially excluded.
112. The Government continues to have high expectations
of banks and other financial service providers, and aims to work
with banks on developments in response to PAT 14. We do not want
to have to legislate, but if voluntary action is unproductive
it may be necessary to consider other options.
We believe that the Post Office itself is not
being sufficiently proactive in maintaining this essential
network. We recommend that the Post Office should appoint Network
Development Offices in rural and sociallydeprived areas,
to ensure that unnecessary post office closures are avoided. We
also recommend that, when an indication is given that the incumbent
manager of a post office is about to retire or resign, the Post
Office should immediately initiate an active campaign to find
a replacement, on terms which are favourable to prospective applicants.
113. The Government is firmly committed to the maintenance
of a nationwide network of post offices and is aware of the importance
of the offices as a focal point for local communities. Accordingly,
and in line with a PIU report conclusion, a formal requirement
has been placed on the Post Office to maintain the rural network,
and to prevent any avoidable closures of rural post offices.
114. An unavoidable closure is one where no one suitable
is prepared to take over from the departing Subpostmaster,
where no suitable premises remain available or can be identified
or where an associated retail business is no longer commercially
115. In the first instance this requirement will
apply up to 2006. This is the first time such a formal requirement
concerning the network has been placed on the Post Office.
116. On 15 February 2001, the creation of a new fund
of £2 million was announced to assist with the costs of relocating
and refurbishing rural offices. The money will help support initiatives
by volunteer or community groups to maintain or reopen post office
facilities in areas where traditional services are under threat.
117. The Post Office are reviewing with the Post
Office Consumer Council and others the present Code of
Practice on post office closures. The Government has urged
them to ensure that the revised Code fully reflects all the necessary
processes for avoiding rural closures. The Postal Services
Commission will monitor and report annually to Government
on the shape of the rural network, the services offered and whether
these meet the needs of rural communities.
118. In a further effort to do everything possible
to protect the rural network, the Post Office is to create a new
senior executive role to oversee these particular interests and
to look at options and alternative solutions for avoiding rural
We welcome the recognition, in the recent report
of the Government's Performance and Innovation Unit, of the importance
of local post offices and of the need for continuing subsidy of
the rural network. (Paragraph 83)
We call on the Government to ensure that the
proposals set out for the future development of the Post Office
in the PIU Report are implemented in full, and that the Post Office
is funded adequately to assure the future of the sub post office
network in remote and socially deprived areas. (Paragraph 84)
119. The Government has accepted all 24 of the recommendations
in the PIU Report 'Counter Revolution: Modernising the Post
Office Network' (28 June 2000).
120. Since publication of the PIU report, the UK
Government has been working with the Post Office and other interested
parties to ensure the implementation of the of report's conclusions.
The Government is committed to a nationwide Post Office network
and is making a significant investment in the automation of Post
Office counters to help secure its future.
121. Implementation of the recommended measures to
modernise the post office network is being supported financially
under the 2000 Spending Review. Provision of £270
million ring fenced funding has been made to start the modernisation
122. This is to embark on a programme of modernisation
across the organisation to maintain the rural network, to improve
support to local offices in urban deprived areas, and to enable
the piloting of new initiatives for post offices to act as Government
onestop shops (General Government Practitioners) and provide
people with new opportunities to use the Internet (Internet Learning
Access Points). The UK Government stands ready to add significantly
to this investment over the next few years with the costeffective
extension of the Government General Practitioner and Internet
Learning Access Points, following satisfactory evaluation of the
initial pilots, and through support for the development of Universal
Banking Services, with the exact amount of new financial support
to be determined once viable proposals have been drawn up and
123. It is also envisaged that with the assistance
of the National Federation of SubPostmasters, the Post Office
will take forward the modernisation programme to develop bigger
and better post offices through relocation or expansion into busier
stores capable of offering extended opening hours and a wider
range of goods and services in associated retail businesses.
124. As recommended by the PIU, the Postal Services
Commission has been asked to advise on the best way to channel
financial assistance to post offices and to report by Autumn 2001.
125. To allow post offices to develop new business
the Government has acted to ensure that by April 2001 all rural
post offices will have networked IT capabilities. This will allow
them to introduce a wide range of new or improved services, including
banking and financial services. Access to other services can be
greatly improved if a broader range of transactions can be delivered
through post offices.
126. In socially deprived areas, where there are
few other retail outlets, the Post Office aims to ensure that
customers continue to have access to high quality outlets, preferably
colocated with shops. In order to support this aim, the
Government will set up a fund to contribute to practical measures
to improve and modernise post office premises in urban areas.
127. In line with one of the recommendations in the
PIU's report, the Post Office is in discussion with the High Street
banks with a view to establishing universal banking services through
post offices. This should give the estimated 3.5 million adults
in the UK currently without bank accounts access to them. Several
high street banks have already agreed to fund the new service.
We believe that the Post Office should fulfil
a very valuable role in the development of the credit union network,
with the local post office providing a base for the community
credit union and, in some cases, with the postmaster or postmistress
carrying out a management function. We commend the decision of
the National Assembly to give £3.8 million to the development
of the credit union movement in Wales over the next three years.
We welcome the expression of support for credit unions by both
the UK Government and the National Assembly, and the provision
of money for community finance initiatives from the Phoenix Fund.
We urge the Government to publicise the value of credit unions
and develop a strategy for fostering their growth. (Paragraph
128. The Government is promoting the development
of the Credit Union movement, with a focus on deprived areas.
This will be supported by a new Central Services Organisation,
to enhance the role of Credit Unions, and an improved regulatory
framework for Credit Unions. Following consultation, we decided
to give the Financial Services Authority rulemaking powers
for the regulation of credit unions. In future, members will have
similar protection to that available to building society and bank
customers. The Treasury has also announced a number of deregulatory
measures to help credit unions grow and provide a wider range
129. Over the past few years, the Post Office had
had a number of meetings with local credit unions, and with their
largest representative body, ABCUL. It also cosponsored
the development of the business case for a Central Services
Organisation (CSO) which was produced last year. The Post
Office recognises the significant overlap between their customer
base and the membership of credit unions, but unfortunately the
relatively small size of individual credit unions has always proved
a stumbling block to generating economically viable working proposals.
130. The Post Office (Consignia) has a network
of 18,000 offices and as such are reliant upon high volume, national
contracts, in order to operate at a viable level of efficiency.
Credit unions tend to be small, locally based organisations and
their requirements are for an agreement with a hand full of offices
at most. The advent of new style credit unions and a national
CSO may well change the position, and the Post Office remains
keen to discuss future opportunities with the credit union movement.
We recommend that the Government ensure that
the debt recovery policies followed by its own Departments and
Agencies do not run counter to its social exclusion strategy.
131. All departments have a responsibility to protect
the public purse but at the same time they do look at all cases
to ensure that hardship is avoided wherever possible.
We welcome the proposals for a national infrastructure
for money advice and urge those involved to progress them as fast
as possible. (Paragraph 92)
132. The Lord Chancellor's Department, DTI, the Scottish
Executive, the Money Advice Trust, and a number of banks and financial
institutions have worked together to secure £1 million from
the Invest To Save Budget for money advice pilots. The
three pilot projects will run for 15 18 months and provide
money advice through a telephone helpline operating from one single
point of entry. If the pilots are successful, the scheme will
be extended throughout Britain.
133. The PAT report 'Access to Financial Services'
(Published by the SEU in November 1999) made a number of recommendations
concerning financial exclusion, including the importance of financial
education, where the Financial Services Authority (FSA) has a
big responsibility, as well as more general money advice. It recommended
that the banks and other financial services firms themselves put
more resources into money advice services, including debt counselling.
It is mainly for people outside of government to take this work
forward - banks, credit unions, insurance industry etc.
but the Government will monitor progress.
134. New Debt Task Force: a conference on
tackling overindebtedness was organised last year, and was
attended by representatives from across the industry including
among other the National Consumer Council, British Banks' Association,
Which, Consumer Credit Association, Council of Mortgage Lenders,
BRC, and the Consumer Credit Trade Association. Lenders at the
conference agreed to participate in a Debt Task Force led by the
Department of Trade and Industry to look at three key areas:
- Improving the transparency of information provided
to consumers before and when concluding a credit agreement, including
the small print;
- Adoption of core principles of lending practice,
including examining an applicant's overall borrowing exposure
and ability to repay; and
- Requiring clear notification to consumers on
free and low interest agreements before the final payment is made.
135. The task force began its work just before Christmas
last year and expects to make recommendations to the Government
in April 2001.
136. The Legal Services Commission is funding
a range of CLS public information leaflets designed to inform
and educate the public on a range of commonly experienced legal
problems, in particular debt problems which may lead to financial
exclusion. The target date for publication is April 2001.
We welcome the Government's support for insurance
with rent schemes, and its Commitment "to work towards a
situation in which nobody is denied insurance because of where
they live". We urge the Government to maintain pressure on
the insurance industry to ensure that they provide a service to
the whole population. (Paragraph 94)
137. The Government is committed to ensuring that
people in deprived areas have access to insurance. The report
on 'Access to Financial Services' recommended Insurance
with Rent Schemes as one way of bringing this about. DETR,
the Housing Corporation, and the Local Government Association
are working with the insurance industry, through the Association
of British Insurers, to promote such schemes among social housing
138. Many social housing providers already operate
Insurance with Rent Schemes. The Housing Corporation are funding
an innovation and Good Practice project to look at the level and
nature of existing activity, and to identify a 'model' that is
most likely to maximise the takeup by tenants whilst remaining
economically viable for insurance companies and social housing
We welcome the development of 'Cost Access
Terms' or nofrills mortgages, suitable for people on low
income, and the growing flexibility of mortgages, beneficial to
those on unsteady incomes or who experience shortterm financial
problems. (Paragraph 95)
139. The Government is committed to ensuring better
protection for homebuyers. Consultation on mortgage regulation
last year showed that what home buyers lack is clear, comparable,
reliable, information to enable them to choose between mortgage
products with confidence.
140. The Treasury announced CAT (Charges, Access
and Terms) standards for mortgages on 10 April 2000, for standard
variable and fixed or capped rate mortgages. These CAT standards
are voluntary and not all mortgages will, or necessarily should,
meet them. But they will tell borrowers what they can expect,
so they can make better informed choices.
141. Consumer awareness of flexible mortgages has
continued to grow year on year, as more lenders have started to
offer flexible mortgage products and take advantage of growing
consumer demand. According to First Active's Flexible Mortgage
Index, flexible mortgage lending has doubled from 11% of gross
lending in 1999 to 22% in 2000.
142. The increased availability of flexible mortgage
products provide stronger protection for home buyers, allowing
more to be paid in good times, and lower payments or payment holidays
when finances are tight to prevent these circumstances resulting
in mortgage arrears and repossession.
Funding for social exclusion projects needs
in most cases to be for a minimum five year period. ... Pump priming
is not enough: in many of the more disadvantaged areas project
funding will be required on a permanent, or at least long term,
basis. (Paragraph 109)
143.The Government recognises that projects to address
deprivation often need to be long term and that these should not
depend on the achievement of swift outcomes. DETR's programmes
in England reflect this, for example the New Deal for Communities
programmes will run for up to 10 years.
144. Effective mainstream services are key to tackling
deprivation. The Spending Review 2000 set specific PSA targets
to ensure everybody, wherever they live, can expect a minimum
level of public services. These 'floor' targets are designed to
close the gap between our most deprived communities and the rest
of the country. This will be achieved by improving health, education,
and employment outcomes, reducing crime and improving the condition
of social housing. The targets were backed up by significant additional
resources. Departments are currently considering how to allocate
resources to ensure these targets can be met.
145. With regard to funding arrangements for community
groups, 'The Funding Code of Good Practice', under the
Compact on Relations Between Government and the Voluntary and
Community Sector contains an undertaking by the UK Government
to respond to the sector's need for greater financial stability
to enable it to fulfil its full strategic role, and to improve
sustainability and longerterm planning for example by providing
multiyear roll forward funding (subject among other matters
to parliamentary approval of the relevant Estimate's provisions).
146. However, the voluntary and community sector
also recognises that receipt of public funds carries with it responsibilities
to the funding body and to the public that benefit from the services
provided, and there needs to be effective and proportionate systems
for the arrangement, control, accountability, propriety and audit
of finances. Government grants are obviously funded by taxpayers
and there is a legitimate need to secure parliamentary approval
of the relevant Estimate's provisions, which is still operated
on an annual basis.
It may be that we need to learn from the private
sector and accept a degree of risk in our social investment. Community
grants should be seen as an investment in the future. (Paragraph
147. The Government values the role of the community
sector in the development of new and innovative ideas, as well
as the provision of tried and tested programmes. However a balance
must be struck between encouraging the development of new ideas,
and accountability to Parliament for expenditure of taxpayer's
money. For this reason a degree of monitoring and evaluation of
programmes is required.
148. As set out in the Code of Practice, monitoring
and evaluation systems are generally relevant and proportionate
to the size and nature of both the funding provided and the funded
organisation, consistent with the need for the effective protection
of, and proper accountability for, public money.
There is a strong case for simpler, broader
funding schemes for voluntary sector projects (Paragraph 111)
149. The Government has made a number of commitments
to promote fair access to funding, in the Code of Good Practice
- giving appropriate advance notice of new funding
programmes before the application process starts;
- recognising that greater clarity about the grant
programme will assist potential applicants in determining whether
or not to apply;
- providing information in different languages;
- reviewing regularly the adequacy of arrangements
for ensuring fair access to funding.
150. The InterDepartmental Working Group
on Resourcing Community Capacity Building is also drawing
up a consultation document on Funding Community Groups, which
is aimed at ensuring that community groups have much easier access
to the funds they need to develop their activities, involve more
people and build their capacity to contribute to the regeneration
of their communities. The plethora of government grant programmes
can present a confusing picture, and the consultation document
is aimed at bringing more coherence to the whole process. It is
hoped to issue the consultation document in the later part of
We suggest that it is inappropriate to make
the funding of social inclusion projects dependent on the achievement
of swift outcomes. And outcomes must be defined very carefully
so that projects do not waste time and effort in pointless boxticking.
151. The Government agrees with this recommendation,
with the caveat that many of the specific social inclusion projects
underway in Wales are the responsibility of the National Assembly.
Regeneration projects, for example, are a devolved matter. The
Government also agrees that outcomes must be defined very carefully
to avoid the risk of wasted time and effort in "pointless
boxticking" identified in the Select Committee's report.
Evaluation must be built into project planning
from the start, and the lessons of that evaluation must be shared.
Across Wales, communities are succeeding in regenerating: others
must be encouraged to follow their lead. (Paragraph 113)
152. The Government accepts this recommendation,
although the evaluation of projects supported by the National
Assembly is a devolved matter. DETR guidance on monitoring and
evaluation of regeneration projects in England reflects this.
Relevant guidance includes 'Local Evaluation for Regeneration
Partnerships Good Practice Guide' (DETR February 1999).
The Government's new guidance 'New Deal for Communities and
the Single Regeneration Budget - Project Appraisal and Approval'
(DETR October 2000) requires constant monitoring and periodic
evaluation of regeneration projects.
We have been very impressed by the reports
produced by the Social Exclusion Unit: while the Unit's formal
remit extends to England only, their conclusions have much relevance
for Wales. It is perhaps too soon to say whether these reports
have had a real impact on the problems which they have addressed,
but the Unit has certainly been successful in bringing different
Departments together to consider problems which cross departmental
boundaries. (Paragraph 114)
153. The Government welcomes the Committee's endorsement
of the work of the SEU.
We welcome the Government's commitment to eliminating
child poverty by 2020, and we recommend that the Government set
a timetable for the elimination of all poverty in the UK, with
clear targets for the reduction of poverty in the shorter term
. (Paragraph 117)
154. The Government is firmly committed to tackling
poverty and social exclusion for all groups in society, wherever
they live. A fair and decent society is one where nobody is held
back by disadvantage or denied opportunity.
155. We inherited poverty on an immense scale - poverty
that had taken many years to develop. There are no quick fixes
or simple answers to tackling poverty on such a scale, but we
are committed to year on year progress in meeting four key objectives:
- eradicating child poverty in 20 years and halving
it in 10;
- helping all adults into work when they can and
providing greater help when they cannot;
- making sure pensioners can live secure, active
and fulfilling lives;
- building thriving communities where all can enjoy
a decent quality of life.
156. Our strategy for achieving this, along with
indicators against which we will measure our progress, is set
out in the Government's annual report 'Opportunity for All'. There
are 34 indicators in 'Opportunity for All'.
157. Poverty and social exclusion is such a wide
ranging problem, which can encompass many aspects of disadvantage
or deprivation, such as living in sub standard accommodation,
experiencing unemployment and low income, having poor health,
and being in an area where core public services are run down.
158. In addition, 160 targets are included in
the new Public Service Agreements announced in July as part of
the 2000 Spending Review ("Prudent with a Purpose: Building
Opportunity and Security for All. 2000 Spending Review: New Public
Spending Plans 20012004", published July 2000). These
cover a range of areas, including targets to improve schools and
hospitals, tackle poverty, get more people into work and cut crime.
- make substantial progress towards eradicating
child poverty by reducing the number of children in poverty by
at least a quarter by 2004,
- over the 3 years to 2004, increase the employment
rates of disadvantaged areas and groups, taking account of the
- Ensure that all social housing meets set standards
of decency by 2010, by reducing the number of households living
in social housing that does not meet these standards by a third
between 2001 and 2004, with most of the improvements taking place
in the most deprived local authority areas as part of a comprehensive
- Reduce the key recorded crime categories of:
vehicle crime by 30% by 2004; domestic burglary by 25%, with no
local authority area having a rate more than three times the national
average, by 2005; and robbery in our principal cities by 14% by
The extent of social exclusion in Wales must
be recognised in the funding allocation to Wales. We have called
in previous Reports for a reassessment of the Barnett Formula,
which since the end of the 1970s has determined the allocation
of public expenditure to Wales, Scotland and Northern Ireland.
We reiterate our conclusion that the Barnett Formula should be
replaced with a formula for public funding which accurately reflects
the levels of need in the various parts of the UK in the year
2000. (Paragraph 118)
159. The Government believes that the current funding
arrangements for the National Assembly for Wales have produced
fair settlements and have allowed the National Assembly for Wales
to allocate spending within their Departmental Expenditure Limit
in accordance with their needs and priorities.
While it would be unrealistic to expect the
UK Government to lower corporation tax to Irish levels, it may
be that it is time to consider regional variations in tax to encourage
investment in the less developed areas. (Paragraph 119)
160. The Corporation tax regime is a UKwide
system and to introduce different rates in one part of the UK
could be seen as distorting competition within the UK as a whole.
There would also be practical difficulties because many companies
trade in different regions of the UK. It would not be easy to
determine the proportion of their profits liable at, say, a Welsh
rate. In addition, this would create opportunities for some companies
to disguise the origin of their profits, or otherwise manipulate
the rules, in order to benefit from the lower rate, resulting
in a system that would be complex and costly to police.
161. The Government has cut Corporation Tax rates
for all companies since coming to power the main rate has
been reduced from 33% to 30% and the small companies' rate from
23% to 20%. In addition, companies with profits of under to £50,000
will benefit from the new starting rate (10%). This is the lowest
rate specifically for small companies in the European Union, and
compares favourably with the republic of Ireland's rates - even
allowing for their planned reduction to a general corporation
tax rate of 12.5% by 2003.
It may be time to reconsider the merits of
Wales forging its own policy on business rates. (Paragraph 120)
162. Nondomestic rates, as part of the local
government finance system, are a devolved area and are the responsibility
of the National Assembly for Wales. This has been demonstrated,
for example, by the different transitional relief schemes introduced
in England and Wales following the revaluation of nondomestic
rates which took effect on 1 April 2000.
163. Existing primary legislation on nondomestic
rates covers both England and Wales, including the rate relief
scheme for village shops and post offices which came into effect
in 1998. Future primary legislation on nondomestic rates
which affects Wales will take account of the views of the National
The Government should take steps to encourage
charitable giving by businesses and wealthy individuals by providing
greater fiscal incentives to donate. (Paragraph 121)
164. The Government accepts this recommendation and
we are already providing considerable encouragement for charitable
giving. For example, the 'Getting Britain Giving' Budget 2000
package of tax measures provides better incentives than ever for
people to give to charity. This includes simplification of rules
on business giving, removing the ceiling on donations through
the payroll and abolishing the minimum donation limit on Gift
165. Last October, the Government launched a national
publicity campaign to promote Payroll Giving, stressing the benefits
and simplicity of the scheme. The campaign is aimed particularly
at larger employers to encourage them to offer a Payroll Giving
scheme to their staff or to make their existing scheme more successful.
The Inland Revenue has written to all employers with more than
100 employees inviting them to call a dedicated helpline
to get Information and Support Packs to give them all the help
they need to get started. The key message is that "Payroll
Giving Gives even more" thanks to the Government's
ten per cent top up on Payroll Giving donations for three years
to April 2003. Further campaign activity is planned with charities
166. The Government is also supporting a campaign
to encourage giving led by the voluntary sector. The National
Council for Voluntary Organisations (NCVO), in conjunction with
the Charities Aid Foundation (CAF), developed a plan for a threeyear
campaign, which the Chancellor approved and agreed to support
with an initial £1 million of funding, as well as with secondments
to the campaign team from the civil service
We ask the Assembly and the UK Government together
to consider whether further legislation is required to control
the activities of unscrupulous landlords and to ensure decent
and affordable housing within the private rented sector. (Paragraph
167. The Government has agreed to look at this, and
its proposals for making the worst landlords better and raising
standards in the private rented sector are set out in Chapter
Three of the housing policy statement 'The Way Forward for Housing'
(December 2000). DETR aims to consult in the spring on proposals
for selective licensing of private landlords in areas of low demand,
and legislation for the compulsory licensing of Housings in Multiple
Occupation will be introduced as soon as Parliamentary time allows.
It is essential that there be close cooperation
between the Home Office, the National Assembly and local authorities
in tackling 'criminal justice' aspects of social exclusion in
Wales. (Paragraph 124)
168. The Government believes that this recommendation
has been met. On cooperation generally, a concordat between
the Home Office and the Welsh National Assembly has been prepared
and is awaiting final agreement by the Assembly.
169. It is intended to promote good working relationships
between the Assembly and the Home Office and to ensure that the
business of government continues to be conducted smoothly and
efficiently. It sets out arrangements for communication and consultation,
exchange of information, finance, access to services, resolution
of disputes and review of relations between the two organisations.
Although not legally binding, both the Home Office and the Assembly
have agreed to abide by the provisions and obligations set out
in this document, wherever possible.
170. As regards cooperation on 'criminal justice'
issues, there is already a close working partnership between the
Assembly and the Home Office, with the Assembly being fully supportive
of the crime reduction and other Home Office programmes.
171. The Crime Reduction Unit at the Assembly
is a joint unit with the Director being a Home Office appointment
and the staff being Assembly staff. Crime and disorder reduction
is being mainlined across all policy areas, especially the social
inclusion agenda. The Crime Reduction Director is making an input
to the social inclusion strategy document 'Communities First'
and also to the overarching Assembly strategy document 'Better
172. Additionally the Director is making inputs to
the Children and Young Persons strategy, the Older Person's strategy,
and the Planning Appeals Guidelines, which are being redrafted
to include advice on crime reduction.
173. Furthermore, there is a good working relationship
with the 22 statutory partners who meet via the chief executives
and chief constables on a Waleswide basis, with Assembly
civil servants and the Crime Reduction Director attending.
174. The Director also has direct access to the Assembly
Minister responsible for finance, local government and social
inclusion. This Minister has responsibility for mainstreaming
crime reduction across all Assembly work.
It is time that those compiling statistics
of public interest in the United Kingdom should recognise the
fact of devolution. Devolved government requires good quality
information from both the private and public sectors and we recommend
that all Government statistics should be published in a format
which allows figures for Wales to be disaggregated from those
for the rest of the UK. (Paragraph 126)
175. The Government recognises that the Welsh administration
has a need for high quality Government statistics published in
a format which allows figures for Wales to be disaggregated from
those for the rest of the UK. Where possible, Government statistics
are published in such a format. Surveys will place a greater weight
on the need for this type of data as they are redesigned, but
ultimately it is for users (i.e. the National Assembly) to provide
funding for any additional statistics that they require.
176. The National Assembly itself is responsible
for a broad span of statistical information on Wales within its
areas of responsibility. These areas and development priorities
are set out in the annual, published "Statistics Plan",
available on the Internet at:
177. More specifically, information on the major
DSS benefit caseloads and their general characteristics are available
from 5% samples taken quarterly from the operational computer
systems. These samples can provide spatial information at the
regional, country and local/unitary authority level and even claimant
counts by Parliamentary Constituency for most benefits. Information
on income patterns in Wales from the DSS Households Below Average
Incomes series is also published.
People experiencing social exclusion and poverty
must be fully involved in developing policy to tackle those problems.
178. This is principally a matter for the National
Assembly, however the UK Government agrees that involvement of
local people and community organisations is essential if policies
are to deliver real and sustainable improvements. The work of
the SEU, which covers England only, outlines the main principles
for neighbourhood renewal in their report 'National Strategy
Action Plan', (January 2001). These include the need to involve
local people, giving local people opportunities to take decisions
on, and deliver, services for themselves.
179. The Government notes that the Committee were
particularly interested in considering this question with regards
to young people. Another SEU study, Report of PAT 12: Young
People (March 2000) similarly recommended that all government
departments and agencies whose work has a significant impact on
young people should have a policy of consulting and involving
them in policy development and service delivery. The Government
fully supports these recommendations, and has undertaken to consult
with a wide range of people, particular those directly experiencing
poverty and social exclusion. It will be for the National Assembly
to decide how far to draw upon the work of the SEU and the recommendations
in these reports, when developing their own policies.
180. We are supporting the UK Youth Parliament (UKYP),
an independent autonomous project. The key characteristics are
- it is being led by young people themselves;
- it is truly inclusive, and young people between
the age of 11 and 18 will be able to get involved; and
- it has the commitment from a range of organisations,
including the National Youth Agency, that they will consider its
views when developing and delivering their policies and strategies.
181. Young people from Llaisilfanc and Back Bite
attended the first sitting of UKYP on 2325 February 2001,
and had the opportunity to meet some Welsh MYPs. Plans have been
made for further elections in North Wales and some areas of South
182. UKYPs Social Inclusion Strategy aims to engage
a representative cross section of young people. In particular
those who are disaffected or disengaged. The aim is to pay special
attention to those who are excluded or feel disenfranchised because
of their ethnic origin, religious or political beliefs, ability,
gender, sexual orientation or offending patterns of behaviour.