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Memorandum submitted by Barnardo's (WR 02)
Introduction 1. Barnardo's works directly with over 100,000
children, young people and their families every year through 400 projects
across the
2. Barnardo's aims to reduce the impact of poverty on children, young people, families and communities through social, economic and community action - around one third of our work focuses on the alleviation of poverty, and it is an inescapable element of nearly all our services. Our experience means we come into contact with many families where no one is currently in paid employment. The changes proposed in the Welfare Reform Bill will therefore have a direct impact on many of the families we work with. Barnardo's summary position on the Bill 3. While being anxious that it be tempered with an overriding concern for the welfare of children who might be adversely affected by its consequences, Barnardo's has sympathy with the Government's proposals to increase the level of conditionality upon Job Seekers Allowance (JSA) claimants. We understand the tensions that these proposals generate, but in the longer term, to meet the aim of eradicating child poverty within a generation, children must grow up in working households where earnings are sufficient to lift them out of poverty. The current economic climate makes it even more important to provide work experience for long-term jobseekers, in addition to intensive support, and for far more investment in re-skilling jobseekers where appropriate.
4. Barnardo's believes that the majority of claimants want to get back into work. For those who have not moved into work, it follows that there may be some significant barrier preventing them from doing so. It is crucial that compulsion is seen as a last resort only after a claimant has been fully supported to overcome identified barriers.
5. Barnardo's key concern is ending child poverty. We support the Government's commitment to both the 2010 and 2020 target, and recognise the substantial investment already made by the Government towards this end, as well as the progress that has been made since 1999. Our work on the Welfare Reform Bill is therefore focused on what measures will best achieve these goals, drawing on the experience of our direct work with children and families.
6. This memorandum concerns Part 1 of the Bill focusing on work for your benefit schemes and changes to social fund loans. This memorandum also provides background policy context on the broader proposals in the Welfare Reform White Paper around 'progression to work'. Policy context 7. The Government has consulted on these proposals in the Green Paper No One Written Off: reforming welfare to reward responsibility (Cm 7363) and the subsequent White Paper. Professor Paul Gregg was also commissioned to undertake an independent review of the benefits system - Realising potential: A vision for personalised conditionality and support.
8. The Bill makes a number of changes to social security legislation creating a revised system of working age benefits, abolishing income support, and introducing 'work for your benefit' schemes. The implementation of Gregg's recommendations (through this Bill and otherwise) will introduce a 'personalised conditionality regime' dividing claimants into three categories: work ready, progression to work, and no conditionality.
9. With regard to children, it is those in lone parent households that will see the greatest change. For lone parents with a youngest child aged under three there is no conditionality; those with a youngest child aged between three and seven will be expected to progress into work; and those with a youngest child aged seven or over will be expected to be ready to work. By 2010 lone parents with a youngest child aged seven and over will not be able to claim income support on the grounds of being a lone parent; they will be able to claim jobseekers allowance if they are able and looking for work. The New Deal for Lone Parents has a very good track record in helping lone parents into work - the evaluation concluded that the programme doubles the chances of lone parents moving into paid work[1]. We believe that this programme should be promoted and extended.
10. Obvious barriers to the delivery of the 'personalised conditionality' agenda include childcare, transport, availability of suitable jobs (particularly in rural areas and given the current economic climate), and access to personalised support. These factors must be addressed.
11. It is also vital that the benefits system provides a real safety net - benefits should be increased so that those on them are not living below the poverty line, and then uprated in line with earnings to ensure that they keep their value. The barriers preventing parents from moving into work should also be removed - for example the '16 hour rule', and by introducing a second earner disregard on Working Tax Credit[2].
12. It is notable that the Government rejected Gregg's recommendation that lone parents should fall into the progression to work category when their child is aged one, and instead increased this age to three years. By 2010 the Government intends to have free childcare (15 hours per week, 38 weeks of the year) for every 3-4 year old and childcare run through term time (8am until 6pm) for 5-14 year olds. There is strong evidence that provision of accessible, affordable and flexible childcare is a key element of change to support parents into work and out of poverty. It is vital that parents are not forced into low paid employment which is not accompanied by affordable and adequate childcare for their children, especially parents of disabled children. Parents must also be able to access affordable childcare over nursery and school holidays. No parent can be expected to be a reliable employee if they are troubled about the safety and welfare of their children.
13. Childcare must be available for the 'progression to work' group and we are concerned that parents in this group will not be able to claim the Childcare Element of Tax Credits. This will result in parents being restricted to undertaking training etc during the time their children are entitled to free childcare i.e. 15 hours. This will severely restrict progression into work and we urge the Government to review urgently how this group can access help through tax credits. In the interim we would like to see sufficient funding for Job Centre Plus so that advisers are able to help with childcare costs for this group.
14. Suitable work can be particularly difficult to find in rural areas. Research with fathers has revealed that many spoke about having to work away from their home area because of limited local labour market opportunities and similar findings were reported in the research carried out in 2003[3]. The labour market in many rural areas is dominated by part-time and seasonal working, low-paid work and a high level of self-employment. Opportunities for training and employment for young people are also particularly constrained.
15. There is also concern
about the availability of suitable public transport to support a return to work
for many people; again this is particularly relevant in rural areas. Transport
costs have been identified as a major barrier to labour market participation in
poverty research undertaken in
16. The success of these measures will rely extremely heavily on the capability and capacity of Jobcentre Plus personal advisers to deliver the amount of necessary and individualised support to claimants. It is crucial that advisers receive training and support to allow them to provide a world class service to claimants. Work for your benefit schemes 17. Clause 1 amends the Jobseekers Act 1995 to require long-term jobseekers to participate in 'work for your benefit' schemes for up to six months. The explanatory notes state that these provisions will be piloted (under s.29 Jobseekers Act 1995) for up to 12 months. The piloting could be limited by area/locality, class of person or to persons selected in relation to specified criteria or through a sampling basis. The details of the 'work for your benefit schemes' are all to be set out in regulations, which is appropriate, but we would expect the Government to give further detail about how this will operate, ideally by publishing draft regulations during the passage of the Bill so that Parliamentarians can be fully informed during debates.
18. Barnardo's welcomes the focus on keeping claimants close to the job market, and offering them the opportunity to refresh their skills after an extended period of unemployment. There needs to be clarity about the definition of 'work related activity' in that it must be relevant to the individual's job-seeking plan. Given the current employment market with 1.92 million unemployed[5], there is some concern that there might be low availability of relevant work related activity, and claimants may be required to perform work which does not fit their development needs and instead simply "ticks the box". It is also vital that employers use this as an opportunity to provide work experience, including clear learning and development goals, and if possible progression into a paid role. It should not be used by employers to circumvent national minimum wage requirements.
19. It is imperative that any required 'work related activity' fits in with claimants' existing caring responsibilities, and that they are provided with support. For example, it would be inappropriate to ask a claimant to perform an activity over a period of time if access to, and the cost of, childcare, transport, appropriate clothing and materials are not met.
20. Sections 17A(5)(e) and (f) state that regulations may prescribe matters to be taken into account when determining good cause for failure to comply, and what circumstances would or would not be regarded as giving good cause for failure to comply. The explanatory notes at para 60 states that an example of a good cause would be dealing with a domestic emergency. 'Good cause' exists in relation to challenging other benefit sanctions and it would be useful if the Minister could set out the parallels between the proposed conditionality regime and the existing one. Draft regulations and guidance should be available before the legislation is passed.
21. Section 17A(6)-(9) set out the 'consequences' of failing to comply. Section 17A(5)(d) states that the consequences should be 'appropriate' but this could lead to the removal of Job Seekers Allowance (JSA) payments for one to 26 weeks. Subsections (8) and (9) provide for hardship payments to be made. Barnardo's would like to see a requirement that before sanctions are enforced, there must be consideration of the impact of sanctions on any dependent children in the household.
22. It is vital that the process of sanctioning a claimant is fair and transparent and that there is a clear and binary relationship between action and sanction so that possible penalties for non-compliance are clearly understood. Any measures need to be communicated clearly to the claimant to ensure that they fully understand their situation. We need to be confident that claimants are dealt with in a way which is fair, treats them with dignity and does not result in inappropriate sanctions being imposed. Given that benefit sanctions already exist, it is presumed that these sanctions will follow the same process of challenge and appeal and for hardship payments to be made to 'vulnerable groups'.
23. While being ready to support the use of benefit sanctions as a last resort, Barnardo's is concerned about the potential and extremely adverse effects sanctioning might have on children already living in poverty. We are concerned about the level of sanction where there are children in the household, and what safeguards are in place to ensure that they do not suffer unnecessarily as a result of any benefit sanction as a result of action or inaction by their parent or carer. In particular, we are interested to know how hardship payments for parents may interact with benefit sanctions.
24. Greater conditionality can lead to worse outcomes for
children. Evidence from the
25. Section 17B provides for contractual arrangements regarding delivery and could enable the pilots to be delivered by third sector organisations. We welcome this option, but seek assurances that third party contractors should not, within their contracting arrangements, be given incentives to select claimants that are easiest to get back into work (cream skimming), or alternatively "park" those who are furthest from the job market. Contracts should ensure that this is not the case, for example by using an "escalator" model for results payment. Contractors should also have regard to the sustainability of the jobs their claimants will move into. One way of achieving this is to measure job retention after three, six and 12 months and pay contractors accordingly. This would introduce financial incentives for providers to ensure claimants are placed into suitable positions.
Social Fund loans (clauses 13-15) 26. Clauses 13 allows the Secretary of State to make arrangements with external providers to provide social fund loans to those on benefits, and for the transfer of existing loans to external providers. Clause 14 provides for access to crisis loans or budgeting loans from the social fund to be restricted in any area in which external provider social loans are available. Clause 15 allows for the sharing of data.
27. These provisions are a result of proposals in the consultation document The Social Fund: A New Approach published in December 2008[7], aimed at increasing access to affordable loans and promoting financial inclusion. Currently social fund loans are interest free, credit unions charge interest rates from 12.68-26.8% APR, and home credit companies like the Provident charge up to 365.1% APR. The Social Fund Reform Feasibility Study undertaken by KPMG for the Government concluded that there was no national financial provider partner to deliver social fund loans and offer advice and other services to this client group. As a result the Government wants to work with credit unions and similar organisations in the third sector, individually or in partnership, to deliver these proposals although this will have limited geographical coverage.
28. Barnardo's experience of working with families who are living in poverty means that we come into contact with many families who have no choice but to resort to credit in order to meet their everyday needs. These measures will have a direct impact on many of the families we work with. Although we welcome the focus on financial inclusion, we have concerns about how these provisions will operate in practice: 1. There will be limited geographical coverage leading to a postcode lottery for customers - those covered by external providers will pay interest on their loan, but social fund loans through DWP are currently interest free 2. Interest free loans still need to be available to the most vulnerable clients. Interest rates of up to 26.8% on external provider social loans will take much needed money out of families' household budgets 3. Clients need to be able to access free, independent and confidential financial advice to make sure they understand the options available to them 4. External providers may not have the capacity
or capability to fulfil this role. Credit unions are vital to the provision of
affordable credit across the 5. External providers may not want to work with this client group. The credit union member profile is quite different from the social fund profile and there is some anecdotal evidence to suggest that Credit Unions have little interest in attracting more financially excluded customers, as they see this as being to the detriment of the their current depositor base. Some third sector organisations may see a conflict between potentially chasing loan defaulters and building a relationship of trust with clients to offer them wider financial services including advice.
February 2009
[1] Price Waterhouse Coopers (2002) Evaluation of the New Deal for Lone Parents: Final report [2] Barnardo's (2008) How to halve child poverty by 2010: options for redirecting resources to reduce child poverty [3] Roberts, G.E, (2006) 'Our
fathers' A picture of fathering in the Blaenau Ffestiniog area , [4] Ibid [5] An increase of 290,000 over the year with increased redundancies, and increased full-time vacancies. http://www.statistics.gov.uk/cci/nugget.asp?id=12 [6] Evans, M and Millar J, (2003) Lone parents and employment: international comparisons of what works, Centre for Analysis of Social Policy, paper prepared for the Department for Work and Pensions [7] http://www.dwp.gov.uk/consultations/2008/social-fund-new-approach.asp [8] Joseph Rowntree Foundation (2006) Building better Credit Unions |