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Lord Goodhart: My Lords, I think it is my amendment.

Lord Haskel: My Lords, I am sorry, I hope that the noble Lord will be able to withdraw his amendment.

Lord Goodhart: My Lords, I was becoming rather hopeful! I am grateful for the small degree of movement that has been made by the Government on the appeal process. I presented the amendment to the Government as a gift horse. However, the noble Lord, Lord Haskel, looked it in the mouth and rejected it. I shall therefore ask leave to withdraw the amendment and look forward with some interest and anticipation to the first occasion on which Clause 63 is challenged in the courts. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.30 p.m.

[Amendments Nos. 48 to 50 not moved.]

Clause 64 [Class 1B contributions: supplemental]:

Lord Haskel moved Amendment No. 51:

Page 48, line 17, leave out from ("rate") to ("of") in line 19 and insert ("specified as the secondary percentage in section 9(2)").

On Question, amendment agreed to.

Clause 68 [Validation of certain housing benefit determinations]:

Baroness Hollis of Heigham moved Amendment No. 51A:

Page 49, line 34, leave out from third ("the") to end of line 35 and insert ("first payment of the revised amount of benefit was made.").

The noble Baroness said: My Lords, Amendments Nos. 51A and 51B are technical amendments to the provision which proposes to legitimise payments of housing benefit where this has, in the past, incorrectly met service charges for personal general counselling and support or "personal care" which are payable as a condition of the tenancy.

Amendment No. 51A replaces a reference to

with the words

    "first payment of the revised amount of benefit made."
As a consequence, Amendment No. 51B removes the definition of "pay day", which is now superfluous.

The amendments clarify the policy intention in respect of a particular group of cases where housing benefit entitlement has been reviewed and revised by the local authority prior to the end of the financial year cut-off date set out in subsection (4). They ensure that housing benefit expenditure in respect of previously

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ineligible service charges for personal support ceases to be validated from the beginning of the period for which the first payment of the revised amount of benefit was made. These are technical amendments and I commend them to the House. I beg to move.

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendment No. 51B:

Page 50, leave out line 8.

On Question, amendment agreed to.

Clause 70 [Budgeting loans: criteria for making awards]:

Baroness Anelay of St Johns moved Amendment No. 52:

Page 51, line 11, after ("grant") insert ("or a budgeting loan").

The noble Baroness said: My Lords, Clause 70 amends Section 140 of the Social Security Contributions and Benefits Act 1992. It covers the question of budgeting loans as a criterion for making awards. Subsection (3) inserts a new provision into Section 140 of the 1992 Act whereby directions may specify circumstances where applications for community care grants may be treated as applications for crisis loans and vice versa.

The amendment would make it possible for an application for a budgeting loan also to be treated as an application for a crisis loan and vice versa in circumstances specified by directions. I appreciate that the noble Baroness, in responding, may say that the amendment would make the system more complex. I appreciate that such an argument was adduced in another place. I would not be against improving the administrative system; far from it. I very much favour simplifying the system while also maintaining fairness between claimants and also between claimants and the taxpayer. Of course, I agree with the underlying objectives of the Bill.

However, I am concerned about the number of people who could be put at a disadvantage by the change in this part of the Bill. Approximately 13,000 people a year could be put at a financial disadvantage. I believe it is therefore worth while adding a little to the complexity of the clause to protect those people. I have not plucked the figure of 13,000 out of the air. Of course not. It is a figure readily available from Hansard of another place in a Written Answer on 2nd March this year at col. 501. The Minister, Mr. Denham, stated that the number of applications for first-tier reviews which had resulted in a loan being changed, either in full or in part, to a grant over the following years were in 1994-95, 12,507; in 1995-96, 15,089; in 1996-97, 13,937; and in the part year 1997 to the end of January 1998, 11,173.

The Minister went on to say that 3 per cent. of the total number of applications for first-tier reviews resulted in a loan being changed to a grant, again either in full or in part. In those circumstances, this amendment is necessary to safeguard the interests of a significant number of people. I beg to move.

Earl Russell: My Lords, I am happy to support the amendment. The noble Baroness, Lady Anelay of

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St. Johns, made the case for it pretty completely; I do not propose to gild her lily. But it is important to have the capacity for interchangeability. In trying to reduce it, the department is putting administrative tidiness before the interests of the claimant.

Carrying the amendment should do something to help to deal with the people who are found not to be able to afford a budgeting loan and therefore, in the past, have been found to be too poor to receive help from the social security system. If that is not an oxymoron, I do not know what is. I hope that the Minister will look upon the amendment with sympathy.

5.45 p.m.

Baroness Hollis of Heigham: My Lords, Amendment No. 52 would effectively mean that the full simplification of the Social Fund applications and decisions process, as provided for in Clauses 69 and 70, could not be achieved. That simplification involves introducing, through the provisions of Clause 69, a separate and shorter application form for each of the three types of discretionary Social Fund payment--namely, budgeting loans, crisis loans and community care grants--and, through the provisions of Clause 70, a separate fact-based approach to budgeting loan decision making.

At present there is one single and all-embracing application form, and one single discretionary-based decision-making system. The proposed amendment provides that applications for budgeting loans may be treated as applications for crisis loans in specified circumstances, and vice versa, in the same way that Clause 70 already allows for such a link between applications for community care grants and crisis loans.

I entirely understand the reasons why the noble Baroness and the noble Earl who supported her tabled this amendment, and I appreciate the concerns which prompted it. On the face of it, the amendment would provide extra protection over and above that already made explicit in the Bill for individuals who apply for one type of payment when another would be more appropriate. However, I hope to persuade your Lordships that I can provide adequate assurance on that issue without the need for an amendment.

It may be helpful to noble Lords if I remind the House of the difference between the three types of payment. Budgeting loans are intended to help people on income support or income-based jobseekers allowance with the cost of one-off household expenses of the kind routinely encountered by most people. The budgeting loan scheme recognises that those who have been on benefit for a period of time may find it difficult to cope with such lump-sum payments out of their weekly benefit--the costs of a carpet, a cooker, and so forth. Community care grants are designed to help people lead independent lives in the community; for example, a mother and children setting up home after marital breakdown or a young person leaving local authority care. Crisis loans are designed to assist with expenses arising from an emergency or disaster which threatens the health and safety of the applicant or a member of his family--typically a fire in a council house or the like.

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It is because of the very different nature of each of those payments that we propose to introduce a fact-based approach to budgeting loan decisions, while leaving in place the existing discretionary basis for the consideration of applications for community care grants and crisis loans.

That is where I take issue with the comment of the noble Earl, Lord Russell, that we are concerned with administrative tidiness. We are not. We are putting the budgetary loan process on an entirely new footing in which the length of time on which one has been on benefit, together with the size of one's family, will allow the application to be dealt with speedily. Far from being administrative tidying up, it is recognised that lone parents in particular--they are the largest single claimants of budgetary loans who seek such one-off payments to help them as they have been for a long time on benefit--will now have speedier access to that benefit system. It is a significant improvement in the situation of benefit claimants who have been on benefit for a long time.

The new procedure for making budgeting loan decisions will be easier for applicants to understand and the basis of decisions will be more transparent. We believe it is very much in the interests of claimants to make this move. The use of specified personal circumstances will enable the process to be automated. Therefore, applications will be handled consistently; decisions will be speeded up; explanations to the applicant will be clearer, and there will be a more cost-effective and efficient administration.

Decisions on community care grant and crisis loan applications will continue to be made by Benefits Agency staff exercising their powers of discretion and, for such discretion to be applied, a considerable amount of detailed information needs to be supplied by the applicant. Thus, were the amendment to be accepted, it would require the existing, extensive applications procedure for budgeting loans to be retained alongside the new, simplified, fact-based decision-making process. That would be the only way to enable a budgeting loan application to be considered as an application for a crisis loan, and vice versa, as the amendment proposes.

I have thought about this matter at length because I shared some of the preliminary concerns of the noble Baroness, but believe that there would be no advantage to applicants or to the department if that were to be the case, and the opportunity for a marked reduction in Social Fund administration costs would be lost. In other words, due to the length of time claimants had been on benefit and the size of their families, even though they merely wanted a budgetary loan, they would have to act as though they fulfilled the criteria for a discretionary scheme. They would therefore have to fill out a much more complicated form and give far more information than they would otherwise need to do under the simplified and fact-based system that we are proposing to introduce under Clause 70 of the Bill. I would be loath to see that go. It would mean that, in order for a few people to move smoothly between the two systems, everybody else would have to re-invent the procedures for a discretionary system.

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I should make it clear, however, that we intend applicants to have ready access to comprehensive publicity and advice, through leaflets and from Benefits Agency staff, so that they can decide, or be advised on, which type of payment is most appropriate to their particular circumstances.

Nonetheless, I accept--and we accepted in Committee--that there may still be some applicants who will apply in all good faith for one type of payment when another may be more appropriate to their circumstances.

It is for that reason that subsection (3) of Clause 70 retains provision for the consideration of an application for one of the discretionary-based payments to be treated as an application for the other. The sort of information the applicant will need to supply in order to obtain one of those payments could, in some cases, also enable consideration of whether the other type of payment is appropriate.

However, since applicants for budgeting loans will be required to supply the information which relates to the standard factual criteria to be used in making determinations, it will not be possible to consider whether a discretionary-based payment is appropriate from that information. The information required will not be relevant to either community care grants or crisis loans. That is the reason why no provision, such as the amendment proposes, has been made. As I say, we have already considered and have put in place plans to protect those who either do not qualify for a budgeting loan or who have applied erroneously for one but are in need of some sort of help.

Perhaps I can repeat some of the assurances I gave in Committee. First, all letters notifying that an application, of whatever type, has been turned down will also contain advice about other payments from the Social Fund. Secondly, as my honourable friend the Parliamentary Under-Secretary, John Denham, M.P., has already confirmed in another place, the Secretary of State will issue a specific direction to Benefits Agency staff. It will require them to take account of a prior refusal of a budgeting loan as a factor in determining any subsequent application for a crisis loan. Thirdly, I wish to confirm what I said when this clause was debated in Committee. Where staff are dealing with an application for a budgeting loan but know from previous knowledge of the applicant that a grant may be more appropriate, they will be able to invite a grant application; also, that we will be expanding guidance to Social Fund staff so that where a budgeting loan is refused on grounds that the applicant is too poor to repay it--the point raised by the noble Earl--that would be taken into account in dealing with any subsequent grant application.

Finally, the Secretary of State, in her annual report, will be reporting on the effectiveness and working of these changes, and she has asked the Social Fund commissioner to inform her of his views on the effectiveness of the new system. We shall thereby keep a watching brief on the efficacy. If the noble Baroness's fears are realised, the department is able, by changing forms, to adapt to the considerations and go back

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somewhat closer to the existing discretionary-based information gathering system. However, we would be reluctant to do so at this stage in the hope and belief that the system we are proposing will be swifter and fairer to the claimant as well as more economical to the department.

We can learn from experience. Our hands are not tied. We have flexibility in the system. If, as I hope will not be the case, the fears of the noble Baroness are realised, we have that power to adapt and to learn from that experience. I hope that the safeguards will provide the necessary reassurance that vulnerable people will still be protected under the new scheme while at the same time allowing the advantages of the changes for both customers and staff alike to proceed. I therefore urge the noble Baroness and the noble Lord to withdraw their amendment.

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