Welfare Reform Bill


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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?
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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