Examination of Witnesses (Questions 520-528)
11 FEBRUARY 2004
RT HON
ANDREW SMITH
MP AND MR
TOM TAYLOR
Q520 Ms Buck: Would you commission a
very specific piece of research to look at that, because I agree
and know that there are some people who make overambitious choices
about their housing, which I accept, and in the area of high housing
demand in particular, which we saw in North Wales and Joan's area
and also in the private rented sector in other parts of the country,
but overall that is not the case. Overall people are struggling
with their housing costs and, the higher the housing cost area,
the more they will struggle. I think we are being overly relaxed
about all of this. Why can you not make a commitment that, if
we are going to go ahead with this change of emphasis, you will
commission some research that says, "Let's really get to
bottom of who these people are, where they are, what their regional
distribution is, what their characteristics are, how they make
their housing choices"?
Mr Smith: I would certainly be
happy to look at the case for further research in this area, and
I will check the research we already have under way. I accept
that could be very useful. The point I wanted to come back to,
though, was that what you are saying and the force of your argument
I do not think detracts from the fact that, given that we have
all these indicators, and to have a composite measure you have
to fasten on some of them, the ones we have selected will give
a fair measure of progress and a fair composite measure of poverty,
but it does not mean that we do not take all these other dimensions
into account as well.
Mr Taylor: Just to add some clarification,
our very own Families and Children Study does an awful lot of
what you are asking there in terms of looking at the housing circumstances
of families. We also have the administrative data which indicates
those cases that are on income support and housing benefit, and
I would like to draw your attention, if I may, to a statement
in the National Statistics publication, HBAI, which summarises
basically that it is not true to say that after housing cost is
a more valid measure than before housing cost. The national statisticians
in their usual way say that they are both equally invalid in the
sense that they are both imperfect measures of living standards.
If we had a perfect way of getting at the point that Andrew was
making, "What is a legitimate amount of quality of housing
to have and what is personal choice", if we could determine
that methodologically then we would probably only have one income
measure. The truth lies somewhere between BHC and AHC.
Q521 Ms Buck: We might have completed
the housing benefit reform of Aneurin Bevan instead of it being
something to be put off for the future! I accept all that; that
is extremely difficult, but the points with this are twofold.
Firstly, it is different, and therefore the Government has to
be very clear that it defends itself against a moving-the-goalposts
argument, I think that is right, but secondly, by the Government's
own recognition, there are people who may be caught by having
overinflated living standards because of their housing costs.
We know there are all these people living below income support
level and subsidising their housing costs but why would anybody
do that? Why would people go short of food and fuel and children's
clothing in order to pay their rent for the most part?
Mr Smith: To the extent that that
happens I am confident it is going to show up in our material
deprivation index.
Mr Taylor: It is the very same
data that is used to measure the after housing cost series that
we have at the moment, so you will have the after housing cost
series but also this extra rich information material on deprivation
from the largest household sample in the country.
Q522 Ms Buck: On the Social Fund, you
will remember that this Committee published a report in the Social
Fund in 2001 which I do not think could be fairly described as
having praised the Social Fund, and in response to that the Government
said that the Social Fund was being kept "under review".
I just wondered what "under review" meant now in the
context of three years on.
Mr Smith: We continue to examine
how it can be improved, and the case for resourcing it better
as well. Obviously I am alert to the criticisms, including by
this Select Committee, of the Social Fund but I would say this:
that it does succeed in getting substantial extra help to significant
numbers of people who really need that help, and because it is
recycling the money it is making good use of the resource available.
As you will be aware, the Chancellor announced an extra £90
million to go into the Fund as well in the three years to 2005-06.
Q523 Ms Buck: That is also fair and was
recognised, and I certainly do not want to rehearse the arguments
but there were a lot of issues about the regional lottery and
the calendar lottery and the rigidity and inflexibility of some
of the rules, as well as some of the administration and the gatekeeping
processes which we were extremely concerned about. What we were
concerned about then, and remain concerned about, is the impact
on people's poverty of the lumpy items problem, not being able
to save up and build a budget to accommodate for emergencies or
major purchases or major life transformations, and that the Social
Fund was very limited, partly because of money and partly because
of rules, in being able to assist that. You will know the Child
Poverty Action Group's proposals as an alternative to this, and
I just wondered whether you were still considering that sort of
policy change? Are you in terms of the Comprehensive Review thinking
of putting forward a further bid for more radical reform?
Mr Smith: We certainly keep under
review, and this is part of the review, the case, for example,
for more of the community care grant approach or grants for particular
items. One of the reservations I have about this, though, is that
you could elaborate the system, albeit at considerable extra cost,
and we are getting back towards the old single payments type regime—"You
can have money for this, money for that, money for the other"—and
a sort of rule-governed approach that says, "You have a right
to this but maybe you do not have a right to that", and whilst
in terms of consistency and people knowing what they are entitled
to there might be some advantages to that, in terms of sensitivity
to the particular circumstances facing an individual at any one
time I think that there might be some loss. In other areas we
are saying how good it is to have more discretion towards the
front end and whilst, of course, that discretion must be exercised
within a consistent series of rules, it would be a mistake to
take away too much discretion here because you would have the
gains of people knowing where they stood but you would also have
the loss of the individual who faces some particular crisis, and
just because of the way the rules work and the money is carved
up it does not cater for their particular circumstance. So there
is a balance to be struck and we keep that under review.
Q524 Ms Buck: Is there anything in the
monitoring of the Social Fund that concerns you? Are you happy,
with the postcode and calendar lotteries, that there are no groups
who appear to be disproportionately losing out?
Mr Smith: I do not think it is
perfect but I do not think it is so imperfect that we should abandon
it.
Q525 Ms Buck: Or fundamentally change
it?
Mr Smith: There is a case which
we continue to examine for reform. There are careful judgments
to be made here in the way I have just been attempting to set
out between the resource we have available and sensitivity to
individuals and circumstances. There are other things, of course,
that we are doing in this area that are very important as well
in terms of improving the advice and education in management of
money that is available to people, and in terms of what we are
doing more generally on consumer credit to attack the loan sharks
and those who abuse people who are vulnerable and in desperate
need of money. That is very much part of this agenda as well.
Promotion of credit unions as well is very important.
Q526 Chairman: The system has, I think
arguably in the past, for perfectly understandable reasons, been
a coherent, nationwide, United Kingdomwide system of an edifice
of taxable rights and benefits, and I do not think any administration
in the future between now and 2010 can seriously ignore the differences
that exist now in the kind of communities that Andrew Dismore
was talking about in inner cities, places like London, and the
costs associated with living there, and the living conditions
in the leafy suburbs of the home counties. I seriously think that
if you are really passionate, as you seem to be, about eradicating
poverty, the systems that you use are going to have to be much
more targeted. That leads you, does it not, inexorably to a differential
system that works, and in Andrew Dismore's area that he described
they are getting worse, and I think there are arguments that say
they are, compared to other parts of the country which are doing
arguably really very well. Is there any plan under consideration
in the Department that looks at regionalisation of the benefit
system?
Mr Smith: Not regionalisation
as such in that sense. In this area there are aspects of what
we are responsible for, where people do expect some national consistency.
You sometimes hear advocates of some regional premia on benefits:
you rarely hear anyone arguing for regional reductions and, relatively
speaking, it is the territory that someone who wanted to advocate
regional variation would have to go on. There are certain elements
you maintain as a national standard—basic framework of benefits,
of rights and responsibilities, the operation of the work-based
interview regime and all of that. There are elements though where
there is a case to be more sensitive to variations in local costs,
and the work has been done on regional price indices and we will
certainly be bearing that closely in mind as we look towards the
future and we are seeing how reliable and how big the variations
are. I agree that there needs—and we are trying to do this—to
be a particularly concerted attack on poverty where you get all
of these factors coming together, notably in the inner city areas,
and it does mean joining up what we have tried to do on New Deal
for communities and the neighbourhood approach, and joining up
regeneration with what we do to help individuals make the most
of their potential and what we do to raise up the standards of
public services in other ways—housing, education—that
I was talking to you about, as well as, and this is very important
in all of this, tackling racial discrimination which is difficult
to combat but we are not going to crack these problems unless
we do that as well. I would make one qualification, though: whenever
we do adopt that locally-based, targeted, focused approach, for
example where we locate our Children Centres and Sure Start Centres
and so on, quite reasonably people point out that even in the
leafy suburbs, even in the more affluent areas of the country,
there are pockets of poverty and deprivation, and it is very important
that we have policies that address the needs of those people as
well. Let's remember also there are certain concentrations of
disadvantage in London and one of the great ironies is that cheek
by jowl with that disadvantage are very tight labour markets and
booming economic conditions, and what we can do to ensure that
within London the inequalities are addressed is as important as
what you do with inequalities across regions. Indeed, as a general
consequence of our economic and employment policies, it is just
worth underlining that unemployment has fallen furthest where
it was highest and variations within regions, including within
London, are now more important than variations between them. It
does not mean that both do not have to be addressed: they do.
Q527 Chairman: As a wrap-up question,
what impresses me most with this is the public expenditure flows
of money that the Government have been putting in, and that is
all good news, but when you get down to the local level you often
find that, with all the progress that has been made in that direction,
and there has been arguably a lot, people on the ground are suffering
with horrendous levels of debt, even in my own constituency, and
I guess that will not be the worst, it is a rural part of south
east Scotland, and I often feel that the statistical framework
and edifice within which we work really has no measure or concept.
The evidence from the CAB around the country, the one thing they
scream at you when you go and see them, is the extent to which
debts are spiralling, and none of this seems to be taken into
account when we are looking at what income households need. If
they are all freed of their debt maybe they would be better off
but there is a real disjunction between the experience of high
streets in the small towns throughout the United Kingdom, on the
one hand, and the fact that the Government is making public expenditure
more available. Is there anything you can do to try and get a
more consistent handle on the level of debt and start to address
that between now and 2010 because, if you do not, I do not think
you will get down to the levels of severe and persistent poverty
that you really need to address to arrive at the targets.
Mr Smith: I have already referred
to initiatives we are taking on consumer protection to tackle
the loan sharks, and sending teams out there to try directly to
combat that. There is no short cut to financial literacy—sometimes
called financial numeracy—but that is very important as
well, ensuring that people have access to money advice so they
know how they can get their way out of debt by rescheduling and
taking sensible steps. We are ensuring that a suggestion made
at the All Party Poverty Group is being followed up, that people
coming to the Social Fund are given information about where they
can get money advice, but we also have to address income, employment,
consumer protection and education and access to advice and it
is not easy.
Q528 Chairman: Can I say that that has
been most helpful. This is an important piece of work for us as
a Committee, as I said at the beginning, and I hope and am sure
that the Department already knows that we are seriously interested
in pursuing this through the CSR in July and beyond. I hope we
will be able to get a report available to ministers in time for
it to be taken into consideration for the CSR deliberations later
in the summer; that is our intention. We are trying to be helpful,
as always, and your appearance this morning has helped us a lot.
Mr Smith: That will be very helpful
and I am grateful for the Committee's interest. I found your questions
helpful as well. This process of scrutiny really does strengthen
the work we are doing in Government, so thank you.
Chairman: I am pleased to hear it. Thank
you.
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