Q
54Mr.
Clappison: Have you any reflections on the age at which
this measure kicks in, which is the age of
three? Fiona
Weir: It is difficult to put a figure on the age,
because if you look at the controls that are already in place, we are
receiving calls all the time from families with children over the age
of 12. That is because 59 per cent. of local authorities’ child
care sufficiency assessments show that there is nothing there for
children over the age of 12. Often, a difficult teenager is harder to
deal with than younger children. A lot of them will have particular
needs and parents will not want to leave them unsupervised over the
summer holiday. Very different sets of considerations apply at
different ages, and people’s children and their family
circumstances are all different. Some families are very strongly
affected by domestic violence, or the conflict that has been going on
within the family. Really, you are in the realm of sensitive judgment
calls and therefore you have to decide who is best placed to make those
calls.
The key
emphasis that we are trying to get in this Bill is a move away from the
constant pressure of sanctions, the threat of sanctions, and
compulsion. Instead, we are saying, “Please build into it
elements that are much more about encouraging people”. For
example, there are provisions to pay employment and support allowance
claimants an extra premium for undertaking work-related activity, but
why could not those provisions apply to single parents? Instead, we
have an entirely unjust comparator, whereby single parents face the
threat of sanctions, even though another claimant group has an
incentive built in.
Similarly, a
lot of the issues that we are raising are about simple measures that
would make it easier for people to take shorter term jobs—for
under 16 hours a week—by increasing the earnings disregard.
Again, this approach builds on opportunities for support and incentives
to take a different route, rather than an approach that is very much
about telling people, without knowledge of their personal
circumstances, what works best for them.
Kate
Bell: We feel that the way in which the progression
to work group is being conceptualised is adding complexity to the
benefit system. It will consist of some disabled claimants who will be
on ESA and, as Fiona said, they will be receiving an additional
premium. However, there will also be this group of single parents who
will be on jobseeker’s allowance, but without full job search
conditions, who will still be subject to sanctions. Although the
approach is principled, we think that it will add an extra layer of
complexity to an already very complex
system.
Q
55Mr.
Clappison: The point is that all the members of that
group, whether they are people on ESA who may have a condition that
inhibits them or a single parent caring for a young child, are on a
journey towards work. However, you say that we must balance these other
factors and take into account the age of the child. May I put the same
general question about the age at which this measure applies to the
Child Poverty Action
Group? Tim
Nichols: We already know that lone parents are one of
the groups that are most at risk regarding child poverty. If those
families could be subject to sanctions
on top of that, there could be a very damaging impact on them. We very
much agree with what Gingerbread says about wanting to emphasise the
positives and the incentives, because lone parents generally want to
work and, we believe, are in the best position to decide when the time
is right for them to do so.
We also have
doubts about the extent to which it is possible to take some of the
successful schemes that are working with voluntary organisations and to
shoehorn them into the suggested sanctions regime. I discussed that
earlier this week with a social enterprise programme that is
successfully getting lone parents and partners into work and retaining
them in work through a voluntary programme. One of the key things it
does is to work extremely closely with employers. When you look at the
barriers, you find that they lie with employers and with access to
child care—we have already heard from Gingerbread about some of
the big problems with access to child care. In summary, we think that
the provision is a distraction from the real problems and that it also
has the potential to do harm to lone parent
families.
Q
56Mr.
Clappison: Do you have any reflections on three as the age
limit for the youngest child at which the full progression to work
regime will kick
in? Tim
Nichols: We think that that is too young. We do not
want to have the argument about the age at which the sanctions should
kick in because we think that that will take us away from the drive to
address the real barriers and to work with the positive ambitions that
are already in place with lone parents and that need to be nurtured,
but if that argument is already taking place, I would say that as you
go down the age groups, you get different kinds of concerns. For
younger children, we are concerned that there are particular
developmental needs in pre-school years, but for older children, we are
concerned that, as Gingerbread has said, there are particular problems
in the transition at secondary age. Those older children will be
meeting a load of new life challenges and might have new problems to
deal with, including serious issues such as coming into contact with
drugs and alcohol or sexual activity for the first time. There can
therefore be very good reasons why the parent might want to have the
time to be
there.
Q
57Mr.
Clappison: Finally, may I ask Martin Narey the same
question? Martin
Narey: I bow very much to Gingerbread’s
detailed grasp of the issues. Broadly speaking, I think that the
principle of allowing a mother—it is almost invariably a
mother—support and preparation for work when the youngest child
reaches the age of three, with the expectation that she might work when
that child is seven, is not unreasonable. The key factor is child care.
Child care has to be available so that a mother can prepare herself for
work and then, in particular, work afterwards. A single mother who is
always worried about where her children are, about whether they are
being looked after adequately, and about whether she will get back from
work in time to pick them up will not be a very good employee, so the
availability of child care, which is patchy, is absolutely vital.
However, I think that the general principles of the Bill are
reasonable. I frequently see young mums with young children who left
school without qualifications and are essentially
unemployable, but who are certainly bright enough—and could do
so, with help and assistance—to become work-ready by the time
the child is
seven.
Q
58Mr.
James Plaskitt (Warwick and Leamington) (Lab): May I ask
about clause 13, which deals with reform of the social fund? I would
welcome your comments and the perspectives of your organisations about
the effectiveness of the social fund in tackling and alleviating
poverty. What shortfalls do you think it has, and to what extent will
the proposed reforms, such as the introduction of external providers,
meet the problems that you perceive with this part of the welfare
system? Kate
Bell: We have long been concerned about the social
fund. The main concern has been the lack of funding in the social fund
and the balance between loans, which are controlled by a tight budget,
and grants, which are available when people are facing genuine
emergencies. Organisations have suggested a number of reforms, often
jointly. A more grant-based system setting out defined moments of need
that could be met through such a fund would be very helpful.
We have some
concerns about the proposals to use external providers. First, we do
not know exactly how those proposals would work. A consultation
document was put out just before December, but the details of how the
scheme would operate are still pretty sketchy. They follow on from a
feasibility study conducted by KPMG, which said that it was very
sceptical that any external providers would be willing to operate in
this area without charging interest. You will all be aware of very
serious concerns about interest being charged on loans to meet the
essential needs of the most vulnerable people.
We are very
concerned about this area of the Bill because we do not know what the
implications will be. We are particularly worried about the provision
that will allow Jobcentre Plus to restrict the availability of social
fund loans when there is an external provider, partly because there is
no detail about the conditions under which the external provider would
provide those loans. We are grateful for commitments that they would
not be interest bearing, but we do not know what conditions the
claimant would have to meet to access one of those loans, and we are
worried about the ability to restrict availability to Jobcentre Plus
loans. Eddy
Graham: A great frustration is that CPAG, like other
groups, has pushed for changes to the social fund for many years, yet
various Governments have not done very much. Now that there has been a
decision to take action, the consultation—or
non-consultation—before Christmas was disappointing. The Bill
itself talks only about contracting out to an external provider and
includes a provision to supply white goods rather than give money. If
the Government have decided to take action, it would be much better to
look at the social fund as a whole. You could look at some of the
research that has been done, as Kate suggested, into making grants at
key stages in claimants’ lives, such as when their children
start school and move to secondary school, and to deal with things that
cause big increases on costs, such as moving home. You could consider
expanding the loan scheme so that it is more generous and more money is
put into it. In effect, the loan scheme is the claimants’ own
money, because they pay it back.
On outsourcing
to private providers, it seems a bit odd to privatise the social fund
when the Government are nationalising part of the private banking
system. We would much rather see a more generous scheme that would meet
people’s needs. Although the social fund is inadequate, it is
there as the last resort for some of the poorest people in the country.
We would like the loan scheme to be made more generous, with
eligibility enhanced. The whole system of eligibility for grants, which
is more than 10 or 12 years old, needs to be looked. It should be
widened to help people who are living on subsistence levels of income,
often for long periods of time, who need access to the social fund for
one-off
costs. Martin
Narey: I am relaxed about the proposals for private
sector providers. The real urgency is to provide avenues of affordable
credit for poor people. As I visit our service users in
Barnardo’s, I meet many families who, rather than getting loans
from credit unions or the social fund, have gone to some of the other
high street providers. I have in my bag the current application form of
the Provident, which is the main company. The interest rate on its most
popular loan of £300, with a weekly repayment of £15 a
week, is 351 per cent. For families who already have virtually nothing,
debt like that at such interest rates drives them into the most
appalling situation. If something could be done on the availability of
the social fund and if the grants system could be looked at, as Eddy
has suggested, it could make things dramatically easier for some of our
poorest families.
Q
59Mr.
Plaskitt: May I follow up what Martin said with the other
two bodies represented? Martin put his finger on the problem of
unaffordable credit, but what scope do you see for the social fund
providing affordable credit? I know that you have spoken about
grants—I understand the argument about grants versus a
loan—but taking the issue that we are trying to deal with, which
is unaffordable credit and the interest rates of 300 per cent. or 1,000
per cent. that doorstep lenders charge, do you see a role for the
social fund in addition to providing a certain amount of interest-free
lending, perhaps in providing the facility for low-cost
credit?
Kate
Bell: We have pushed for consideration of how the
social fund could also meet the needs of people in low-paid work for a
long time. Currently, it is restricted to benefit claimants, and the
transition from being a claimant to being in low-paid work has been
difficult. Providing affordable credit to low-paid and poor people is
difficult and expensive, as every study has stated. We are keen to see
proposals on how it could work, and there might be a role for an
expanded social fund, but its first job must be to meet the severe
needs that it currently meets. Then we need to take a good look, but
that might not be possible in the time scale for this Bill. Our
frustration relates to the wider issue of providing affordable
credit.
Eddy
Graham: CPAG’s concern is about where the
distinction would be drawn between an extension of affordable credit
and what the social fund currently does: providing money to people on
benefits to buy essential items. The idea of charging interest to
people through an expanded scheme for renewing basic household items,
such as cookers, washing machines and beds, which is what we worry that
any expanded scheme might drift into, seems completely out of
place.
4.32
pm
Sitting
suspended for a Division in the
House.
4.47
pm On
resuming—
The
Chairman: There is no provision for injury time, so we
have only until 5.30 pm with the present witnesses, but I shall ensure
that all hon. Members who catch my eye can ask their
questions. Eddy
Graham: I think I had finished my point, which was
about extending loans on a commercial basis at a low interest rate. I
reiterate that the social fund is for the neediest and poorest people,
and we would not want the charging of interest to creep into loans for
replacement of basic household items, which is what it is currently
used
for.
Q
60Mr.
Plaskitt: Do you want a crack at this, Mr.
Narey? Martin
Narey: I think that in addition to arrangements for
absolutely basic items—I agree entirely that as far as possible
they should be provided free—there is a case for some sort of
affordable credit. Many families, not illegitimately in my view, want
to borrow money for things that are not essential. The Provident
mailshot before Christmas was aimed directly at mothers, who were asked
whether they wanted to provide a decent Christmas for their kids.
Paying such an interest rate to do something that we all want to do is
pretty
sinful. I
am not being glib. I know that the default rate on such loans is very
high, and my colleagues behind me have reminded me that in Scotland we
have been looking at the possibility of Barnardo’s issuing
loans, but we have calculated that to break even, without making a
penny profit, the interest rate would have to be very
high.
Q
61Mr.
Plaskitt: Of what sort of
order? Martin
Narey: Perhaps approaching 100 per cent., because we
would be lending to very high-risk families, but some of the companies
that I am talking about could have lower interest rates than their
current rates, as demonstrated by their high
profitability.
Q
62John
Howell (Henley) (Con): May I take you back to
conditionality? There are two issues. In the CPAG evidence that you
kindly provided for Second Reading, you said that conditionality is
wrong in the current economic circumstances. The Barnardo’s
memorandum shows that the current economic climate makes it even more
important to promote work experience. So there is a difference of view
there, which seemed to me to be encapsulated in what you said at the
beginning about a difference in attitude to conditionality for lone
parents as a whole, with the four at one end of the table being
anti-conditionality and you, Martin Narey, if not being pro, then not
accepting it as much of a
negative. Would
you like to comment first on whether there is a polarity between you in
terms of the acceptance of conditionality, and secondly, within that,
on the relevance and the impact that you think the current economic
circumstances have on the issue of conditionality?
Martin Narey,
since you are the loner in this group, perhaps you might like to
start. Martin
Narey: So I am a pariah here. On most things to do
with child poverty, most of us agreed on the things that needed to be
done and we all agree, I think, that most people who are not in work
want to get into work and make a better future for their children, and
we agree that they should be given all assistance. We simply differ on
the following: I think that when help is not taken up and individuals
refuse any assistance to get them into work, ultimately, in the
people’s interests and those of their children, there is a case
for conditionality to encourage them
further. The
second part of your question was about the recession. I read the Second
Reading debate and saw that mentioned a couple of times. The experience
of previous recessions is that some people have drifted out of work for
ever and have never got back into work. The fact that we are entering a
recession and the fact that there may be fewer jobs does not mean that
there is not a case for trying to get people who are persistently,
long-term unemployed work-ready. We will not be in this recession for
ever, but history shows that sometimes the damage caused in the
recession means that you can never get people back into work when it is
over. Tim
Nichols: I do not think that there is necessarily
that much of a conflict. This can be overstated. As I reiterated at the
beginning, we think that it is important to give people the support
that helps them towards work. In the current economic situation, where
the claimant count and the numbers out of work rise, you will see
people who are a long way from being work-ready potentially being put
in competition for a declining number of
jobs. First,
there is a limited amount of resources to go round. Secondly, some of
the people who we all want to see given work-related support can be
quite a number of years from being job-ready, for example because of
the circumstances of their life, the age of their children and
particular barriers that they might face, which emerge when a holistic
personal assessment is made of a person’s needs. Certainly,
during this time there is potential for them to be helped. You can do
work with someone who is, perhaps, roughly five years away from being
ready to contend and go directly into the labour market that will bring
them, over the next couple of years of economic difficulty, to being
three years away from that point. The question is not whether that work
should be done, but what is the right and most effective way of doing
it and whether stepping up conditionality is what
works. The
Child Poverty Action Group would like to see investment in support.
There are some good voluntary sector programmes that are getting good
results, but we do not think those will work if they have to be put
inside the red tape of sanctions bureaucracy that undermines the way in
which the voluntary sector works and the trust relationships that are
built.
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