Select Committee on Welsh Affairs Second Special Report



(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. (Paragraph 20).

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 and subsequently.

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 occupational exclusions.

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, including:

  • 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 Community competence.

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 34)

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 in Wales.

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 Board.

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 UK includes:

  • £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 42)

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 been lower.

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 these recommendations.

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 these workers.

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 services.

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. (Paragraph 54)

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 off.

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. We have:

  • 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 of 34%.


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; and
  • 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 Job Grant.

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 66)

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 in Welsh.

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 involved.

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 67)

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 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. (Paragraph 70)

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 payments.

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 given them.

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. This included:

  • emphasising removal of unnecessary barriers;
  • development of the right products;
  • opening up of new delivery channels and consumer education; and
  • the provision of better information about banking services.

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. (Paragraph 83)

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 viable.

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 closures.

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 process.

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 approved.

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 87)

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 of services.

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. (Paragraph 91)

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 providers.

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 providers.

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 110)

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 which include:

  • 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; and
  • 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 March 2001.

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. (Paragraph 112)

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. Examples include:

  • 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 economic cycle.
  • 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 regeneration strategy.
  • 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 2005.

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 Assembly.

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 Aid.

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 themselves.

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 123)

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 Wales.Dot.Com'.

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. (Paragraph 128)

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 that:

  • 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 Wales.

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.

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