Examination of Witnesses (Questions 440
- 459)
TUESDAY 13 MARCH 2007
MR DOUGLAS
HAMILTON, MS
CLAIRE TELFER
AND MR
JASON STRELITZ
Q440 Mr Davidson:
I just wanted my prejudices confirmed. You have made a number
of recommendations for both the Scottish and the UK Government;
maybe you could just expand on those for us and give us an indication.
If you had three choices, three things in particular that you
think we ought to be doing, what would they be?
Mr Hamilton: If I kick off, at
a UK level seasonal grants is our main call at the moment.
Q441 Mr Davidson:
I understand that. Can you just clarify for me why you think seasonal
grants as distinct from increasing the standard amount of money
that people get through the year?
Mr Strelitz: We think both. We
are supportive of the evidence from the Joseph Rowntree Foundation
Report published last summer that about £4.5 billion needs
to be invested, broadly speaking, in the tax credit and benefits
system to help meet the 2010 target. As part of that we think
there is a strong case for seasonal grants, based on two things
really. The one is reflecting evidence from reviews of the Social
Fund over recent years, as I mentioned earlier, and the other
is evidence from the US-based earned income tax credit where American
families receive lump sum payments at the end of the year. Evaluation
of the earned income tax credit, despite the fact that those families
live on very low incomes on a week to week basis, something that
we would not seek to emulate by any means, having a lump sum payment
allows low income families the freedom that week-to-week payments
do not, so when you are subsisting on a low income from week to
week there is a whole range of elastic items that small increases
in your weekly income can be spent on, whether it is a bit more
food, money for activities such as swimming or a trip to the launderette
or whatever. There is a whole range of things that it can go on.
Families in poverty, specifically families in severe poverty,
find it almost impossible to save any money, and therefore they
do not have the lump sum payments to pay for the large one-off
items to make some choices about how they use their resources.
We think there is a strong case, based on that, for a lump sum
payment, specifically at the two times of year that our research
has identified are the times when low income families struggle.
Q442 Mr Walker:
Is there not a danger with lump sum payments in the sense that,
knowing the payment is coming, families will build up debt in
anticipation of the payment? Do you see where I am coming from—the
money will be spent before it arrives, so would it not be better
just to allocate it over the course of the year evenly as opposed
to two big dollops?
Mr Strelitz: I have no doubt that
some people would use the lump sum payment for that and I do not
necessarily see that as a danger. The knowledge that the lump
sum will be coming will allow people the freedom to balance their
resources in a more even way leading up to that lump sum payment,
but for others getting the lump sum will give them the opportunity
to pay for more expensive one-off items.
Q443 Mr Walker:
Sorry, I am not meaning to be argumentative, but if you improve
their weekly or monthly payment over the cycle they would not
be building up debt, because if you are building up debt in advance
of money being paid you have to service that debt before the payment
arrives at some of the levels we have already discussed, 177%
you mentioned. There is a difference and I know it might sound
small, but for families living on very low incomes small differences
seem to make a difference. That would be one of my concerns.
Mr Strelitz: I do see the concerns
and we are also advocating increases in weekly incomes which we
think are necessary, but as I say the evidence is there that families
could make significant use of lump sum payments in a way that
is very difficult for them to save small amounts of money on a
week to week basis.
Q444 Mr Davidson:
How much would these lump sum payments be compared to the weekly
payments? Are you talking about twice as much, thrice as much,
half as much?
Mr Strelitz: What we are suggesting
is £100 per child at summer and winter and then an extra
£100 for the family at winter to be an equivalent of the
winter fuel payment. That has some mirror in existing policy;
the Christmas bonus that you receive on incapacity benefit and
a range of other benefits was introduced in 1972 at £10 and
in 2007 is £10, so it has entirely lost its value. It was
recognised then that in winter there was this need for an extra
resource to help the family at a particularly difficult time of
the year and that money has just lost its value.
Q445 Mr Davidson:
What are your other two?
Mr Hamilton: That is number one
for the UK. I will give you one that will focus on the Scottish
Executive and one that hopefully they can do together between
the Scottish Parliament and the Westminster Parliament. The one
we are calling on particularly for the Scottish Executive at this
time is—and I go back to what we were saying about keeping
the focus on severe and persistent child poverty—to refocus
some of the policies they have got, that are clearly making a
difference around things like the Working for Families Fund and
Sure Start, for example, to take them and address them so that
they actually reach the poorest families. Again, the evidence
we are getting on the ground is that projects set up by the Working
for Families Fund, they are recognising that they are still not
able to reach actually the poorest and the most vulnerable families
in their communities because of the gaps that still exist in assisting
parents back into training courses. Some of the people we are
talking to around Sure Start, for example—which, as you
know, operates very differently in Scotland than it does in the
rest of the UK—the money and the services are not necessarily
reaching the poorest families, so we will be calling on the Scottish
Executive to refocus a lot of the attention for those types of
interventions to the poorest and most deprived communities, with
a very tough target of making sure that they actually reach the
poorest and most vulnerable families. That would be number two.
Number three, which we are very keen to take up, is something
that probably came from the 2000 inquiry that this Committee conducted
around poverty and is the joint arrangements at a parliamentary
level and also at an executive level for taking scrutiny and accountability
on these issues around child poverty. We think there is real merit
in exploring that further. Child poverty is probably one of these
issues which is fairly unique in the sense that it is a domestic
social policy where the levers are shared between the Westminster
Government and the Holyrood Government and we can do a lot more
in trying to work together. I know there was a joint ministerial
committee that was set up a number of years ago and I was trying
to find out some information on that, just before we came down.
My understanding is that it met once or twice, and there were
all very good intentions and they agreed that they would work
together but nothing really happened and they have not really
met for a long while. Now that we are looking at welfare reform
and we are at a stage where the Scottish Parliament is going into
its third term in May, as far as we are aware most parties are
committed to targets around eradicating child poverty, it is a
shared commitment.
Q446 Mr Davidson:
I understand generally that it is good to talk as it were, but
what I am not clear about is how that process would add value
in this area? Are there particular examples where the two Parliaments
not having talked to each other have caused a particular difficulty?
Mr Hamilton: I do not know if
it is necessarily causing difficulty, but what we are missing
are potential solutions there that could be put together.
Q447 Mr Davidson:
Give me an example of how having a dialogue would add value?
Mr Hamilton: When discussions
are taking place around welfare reform, for example, and we say
what are the kinds of initiatives that are taking place at Westminster
around welfare reform, and how to help people transition from
benefits into work, we can get the Scottish Executive to make
sure that any gaps that are maybe in those policies are identified,
or any strengths that can be really capitalised on in developing
policies in Scotland. I am convinced that there are other ideas
out there, there are new ideas that we need to be looking at on
how we can tackle and reach the poorest families, and by combining
resources and combining the focus and attention on that, we may
be able to start to unpick some of that. Maybe I am too optimistic,
but I really feel there is a lot of value in pursuing that.
Q448 Ms Clark:
Going back to Child Seasonal Grants, have you calculated how many
children in Scotland would benefit from the introduction of those
grants, and at the levels that you have suggested have you worked
out how much it would cost the Chancellor of the Exchequer for
introducing such a measure?
Ms Telfer: UK-wide it is £1.46
billion and the UK-wide figure for that is lifting 440,000 children
out of poverty, and in Scotland we would estimate that to be about
45,000.
Mr Hamilton: What we are saying
is that we reckon 45,000 children in Scotland would be lifted
out of poverty and we also reckon that the benefits would reach
about 300,000, we are looking at a threshold level of people who
would receive seasonal grants would be those in receipt of income
support or in receipt of jobseeker's allowance or the maximum
working tax credit. We are roughly talking about 300,000 children
who would benefit in Scotland.
Q449 Mr Walker:
The cost of that would be?
Ms Telfer: We do not have the
cost just for Scotland. The UK-wide cost is £1.46 billion.
Mr Walker: If I can put that in
context, that would be like lifting the threshold at which people
start paying tax by £150. We start paying tax at around £5035,
so it would be the equivalent of lifting that by around £150.
Q450 Ms Clark:
In your submission you also give a number of ways that the UK
Government could specifically alleviate poverty, and one of the
examples is a more flexible benefits system. Can you actually
outline what you mean by that and what it is that you want the
Government to do to make benefits more flexible?
Mr Strelitz: One of the things
that is clearly a risk for many families in severe poverty, which
our research has emphasised, is the point of transition into and
out of work. People on low incomes tend not to go from out of
work into experiencing regular, nine to five work, they go much
more into part-time work, unsociable hours, shift work, et cetera,
and also coming in and out of work so experiencing the kind of
low pay no pay cycle. The benefits system is not really set up
to allow people to move in and out of work. For example, housing
benefit is a significant problem for people, the way it is administered,
and it is a cause of many people going into debt as they either
wait for their housing benefit to come through or they get housing
benefit overpayments and then are forced to pay back some of that
benefits. It is necessary, therefore, for there to be simplification
of benefits around things like housing benefit, but there is also
potential for helping people move back into work. For people who
have been out of work for a significant period of time, moving
back into work should be a slow and gradual process and the benefits
system can do more to allow people to keep some of their benefit
income whilst they move into work, doing a few hours a week, and
support that gradual reintegration into the labour market. Those
are a couple of areas that we would look to.
Q451 Ms Clark:
There is quite a lot of regional variation at the moment in terms
of how the Department of Work and Pensions operates and the job
centre operates. For example, in my area Pathways into Work was
just brought in at the end of December so it is really only just
beginning to operate; do you have a view in terms of whether more
recent Government initiatives are making a difference? Is that
something that you have looked at, because this is an issue that
has been raised previously by a number of organisations but they
have not necessarily been aware of some of the initiatives that
are coming in. I just wondered if that is something that you have
given consideration to.
Mr Strelitz: The one area where
we are aware of some improvement is around tax credit administration,
where there have been some improvements, but it should not be
under-estimated on the grounds that the problems tax credit administration
has had in terms of people's fears and even engaging with the
system at all mean there is a lot of work to be done to rebuild
trust in that kind of system, and the fears of people on benefits
and out of work are important. Moving into work can, for many
people, mean increases in their incomes, but with people's concerns
about the benefits system, with tax credits, with housing benefit,
with what will happen to their income support, at times people
prefer the security of a low income that they know they will get
to the risks of an inflexible benefits system, an inflexible tax
credits system and difficulties around the low pay no pay cycle.
For parents with young children moving back into work, they cannot
afford to take those kinds of risks so there is a real responsibility
to try and create a more simplified, more transparent and understandable
benefit and tax credits system so that parents can feel more secure
moving from benefits into work.
Q452 Danny Alexander:
I have to say that having visited Scotland and met with distinguished
people like yourselves, I am increasingly of the view that people
just start paying taxes at too early a stage. It seems madness
to me that someone earning the minimum wage, for example, is paying
income tax and national insurance on that wage and then having
the money laundered back to them, for want of a better word, in
the form of tax credits. It just seems wildly inefficient. I am
trying to be non-partisan on this because I am sure as politicians
we have different ways of deciding how we would fund that if there
was an increase in the threshold, but I would be interested to
know what your views are on that.
Mr Strelitz: I would not give
a particular view on the tax threshold, but what I would say is
that there is no doubt that the kind of effective marginal tax
rate faced by people on low wages is far too high, so whilst Government
policy has been very successful at creating the incentives for
people to move from being out of work and into work, there are
major barriers existing for people to move from lower pay to higher
pay, to increasing their number of hours, to taking on a promotion
with extra responsibilities and extra pay when actually in their
pocket they will see a very, very low increase in what they take
home. We have created a new issue around in-work poverty and difficulties
of stepping up a ladder from a position of receiving low pay.
Q453 Mr Davidson:
May I ask about the national minimum wage and whether or not you
have an attitude as to the level that would be appropriate?
Mr Strelitz: Obviously we are
very supportive of the national minimum wage but we do not have
a view right now of the level that we think it should be set at.
Q454 Chairman:
You state that gypsy and traveller children are particularly vulnerable
and I am sure you will appreciate that it is very difficult for
local councils and health authorities to keep tags on such families
who are continually on the move. Does Save the Children try to
impress on gypsy and traveller parents the need to ensure that
their children do have access to education and health services?
Ms Telfer: In Scotland we have
been working with the gypsy and traveller community for over 20
years and we do work with them in terms of education and health
services. One recent example of something we have done with communities
in Scotland is to produce a handheld health record whereby families
or individuals can carry that record with them rather than GPs
holding records when families are moving around, which obviously
makes it easier for them to access health services. In terms of
education that is a difficult one because there are different
views on whether formal education is supported within the gypsy
and traveller community, so we need to look at more informal types
of learning and not just school education, but widen out access
and think about other ways in which we can support gypsy and traveller
families in terms of their education and support more informal
learning as well within our communities.
Mr Hamilton: The experience as
well of gypsy and traveller families around these sorts of issues
in terms of benefits is going to be the same for other parts of
the community as well. As Claire says, we have been working with
the gypsy and traveller community for twenty-odd years in Scotland
and part of that work has been around benefits advice. Despite
child benefit being the most universally claimed benefit, the
most widely taken up benefit, we are still finding families that
were not aware or were not able to access or claim that type of
benefit. The other angle that we are coming from is that we are
talking about how these families can access some of the advice
that is actually available at the moment, and sometimes the systems
are in place but they do not always work. If you are in a rural
area then the only kind of way that you can make an appeal is
a phone line that you have to call and, as you are aware, there
are vast areas of Scotland that still do not have mobile phone
reception, with decreasing levels of public phone services or
whatever, which actually makes it very difficult for people to
engage with the systems that are in place. That is not just for
the gypsy and traveller community, it also highlights some of
the issues which are facing other groups that may be living a
more rural or more transient lifestyle.
Q455 Mr Davidson:
Could I clarify three points if I could? The first is your point
on the 50p issue as it were and then what you said subsequently.
I am not clear what you are saying to us that we should do about
all that because we have to draw up a report at the end of this
and then recommend something and so on. Apart from saying slit
your wrists it is all hopeless, what are you suggesting? That
is the first point and maybe I will just take them in series.
Mr Hamilton: What we are suggesting
is that we are at the stage where in some ways we are going to
be able to report and cover what exactly the reality of our experience
is from a lot of children and families. What we would be looking
for service providers to do—and it is not just Government,
there is going to be voluntary sector providers, public sector
providers at local authority level and some private sector providers—is
to reconsider how it is that they provide services and how young
people can access those services by tackling not just the barriers
of entry costs but looking at the other barriers that may exist
for low income families et cetera, how they may access that, how
do they get there and other issues about how they are set up.
There is probably very little in some ways directed towards what
is within the Government's powers around that, there is a lot
more around what is going on at a local level and how local service
providers actually deliver their services.
Q456 Mr Davidson:
You are producing something on this are you?
Mr Hamilton: Yes, research will
be produced in April. We have been doing this research for the
past two years.
Q457 Mr Davidson:
Maybe we could be sent that when it is issued.
Mr Hamilton: Absolutely we will
do that for you.
Q458 Mr Davidson:
The second thing is part of what you said when you talked about
the cycle and how poor families reap poor families et cetera.
How do we break that cycle?
Mr Hamilton: One of the most depressing
things when we were talking to young people about this was actually
the whole level of aspiration that exists within children who
come from low income households. If I was to pick anything at
all, that would be the key thing. How can we work with children
and young people and families in severe poverty to increase their
aspiration, show them that actually there is a different—
Q459 Mr Davidson:
How do we do that?
Mr Hamilton: We are working on
a programme just now to start looking at how we can address that
and what we can contribute towards that debate. The way we are
going to be doing that is by targeting the work, so working with
the most deprived communities, looking at children in those situations
and asking what other things go on with more affluent children,
for example, to help them, encourage them to be aspirational and
look towards the future.
| 
