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Finally, I understand that most loans are for broken domestic appliances. Some offices, I am told, are giving loans of less than the replacement value of a bed, cooker or washing machine. It seems odd in this day and age that a refrigerator is still an excluded item—I understand that loans are not given for them. Why will the Government not take up the suggestion of the Social Fund Commissioner who believes that with their purchasing power, the Government could get permitted items considerably cheaper, even at cost? The client could go along to the shop or manufacturer of his choice, and the local Social Fund officer would
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So there are several low- and no-cost things that the Government could be doing to improve the Social Fund. I wait, with eagerness, to hear what is being done to improve its operation, over and above what has been done in the past 18 months or so.
8.03 pm
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, I thank the noble Lord, Lord Kirkwood, for initiating the debate and for giving us an opportunity to discuss the Social Fund. I also thank the noble Lords, Lord Oakeshott and Lord Skelmersdale, for their contributions.
I will start by outlining the Government’s view on the Social Fund and reform. Noble Lords will know that the Social Fund was introduced over the period 1987 to 1988 to replace the old supplementary benefits single payments scheme. I am impressed that the noble Lord, Lord Kirkwood, was there at the birth of the arrangements. The scheme plays an important role in helping people on low incomes who are likely to have difficulty in coping with large one-off expenses. In particular, the discretionary part of the scheme provides a vital safety net for vulnerable people at times of pressure or crisis, as well as a budgeting tool for handling more routine expenditure.
Overall, during 2006-07 the discretionary Social Fund provided help in the form of more than 2.6 million awards, mainly to people on qualifying income-related benefits. We paid 1.3 million budgeting loans amounting to nearly £600 million, together with a further 1.1 million crisis loans amounting to a further £100 million. That was in addition to more than a quarter of a million community care grants at a cost of £140 million. From the start of the Social Fund until the end of November 2007, more than 35 million loans—worth more than £7.6 billion in cash terms—and more than 4.9 million community care grant awards have been made. Whatever the challenges of the Social Fund, it is clearly meeting need in significant measure. The Social Fund plays a unique role in giving our customers a source of both discretionary and regulated grants, and of interest-free credit. Unsurprisingly, it provides most assistance to people who are most vulnerable to financial pressures—lone parents and disabled people.
The Government have signalled a clear commitment to continue to help people on low fixed incomes to budget for their needs. We have made a number of significant improvements to the scheme. Between April 2003 and April 2008 we will have invested an additional £300 million in the discretionary Social Fund to provide more help to more people and make more improvements, particularly to the budgeting loans scheme. In 1999, the Government transformed budgeting loans from a wholly discretionary scheme, where applicants had to justify the need applied for and the priority of that
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Jobcentre Plus has undertaken a significant programme of change to modernise its services to customers and to improve efficiency. As has been recognised, Social Fund delivery has been centralised into 20 benefit delivery centres, pulling together expertise and providing opportunities for standardising procedures and improving the quality of decision-making. Jobcentre Plus is also looking at how to remove the need for a customer to visit an office to sign paperwork. That will provide better customer service and, in many cases, avoid the need for a customer to travel. We continue to look for ways to make improvements to the scheme and to its operation, where we can.
Successive Ministers have made no secret of the fact that we want to change the budgeting loan element of the Social Fund to link it more closely with the Government’s financial inclusion agenda. Many of the people we deal with on income-related benefits—the people who apply to the discretionary Social Fund—are financially excluded. They have little access to, or confidence in, their ability to handle mainstream financial services. As we know, exclusion from mainstream financial services can impose costs on those who can least afford them. The poorest in society can pay very high charges for credit; we are aware of 183 per cent or more from some home credit providers, and much more where someone has to resort to loan sharks. That is totally unacceptable.
The Government’s financial inclusion strategy is about ensuring that everyone has access to the services that they need to manage their money on a day-to-day basis, to plan for the future and cope with financial pressure, and to respond effectively to unexpected events. There is a clear link here with our employment goals. We see work as the best route out of poverty for most people. However, there is a problem if they do not have a bank account that wages can be paid into. Starting work means that they lose access to budgeting loans; and they may see little prospect of reasonable low-cost alternatives.
The Government would like the significant resources that we have invested in the Social Fund to make a more effective contribution to helping people to overcome financial exclusion. The Government are trying to bridge the gap through helping to increase access to alternative forms of affordable credit for people on low income—whether or not on benefit. The noble Lord, Lord Skelmersdale, asked about the third sector. We recognise the valuable role already played by third-sector lenders in providing low-cost services and loans to financially excluded people. I am referring, as he did, particularly to credit unions and
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However, coverage is limited and in many areas people do not have access to those services. There is need for a larger capital and consumer base for the sector to grow and become sustainable. The Government launched their financial inclusion strategy in 2004. As part of that strategy, £42 million was made available from the £121 million financial inclusion fund for a growth fund to help make more affordable loans available to more people on low incomes in areas of high financial exclusion.
Up to 30 November 2007, more than 53,000 loans worth more than £23.5 million had been made from the growth fund to financially excluded people. The Government’s financial inclusion action plan for 2008-2011, published in December, included a further £38 million to support the growth fund. That action plan also announced plans to conduct a feasibility study to look into whether the private and third sectors could be brought into partnership with the Government in delivering a reformed Social Fund budgeting loans scheme.
I believe that that could be a very important and significant step along the path to reform, but we must not underestimate the problems and the step change that would be needed. The study will need to assess a number of tough issues and we would have to be sure that any replacement scheme would deliver real advantages and would continue to provide the type of protection needed by the most vulnerable.
I turn now to some of the more specific points raised. All three noble Lords raised the issue of crisis loans and customers who are unable to make their application by telephone. Jobcentre Plus prefers to take applications for crisis loan living expenses by telephone. It is the quickest way for customers to have their application processed. However, Jobcentre Plus accepts that there are some customers who, for legitimate reasons, are unable to make the application by telephone and it will continue to accept applications made in writing and submitted through one of its offices. I acknowledge that that has not been the case in the past in every instance. Training is absolutely necessary to ensure that there is no recurrence of the instance to which the noble Lord referred.
Lord Kirkwood of Kirkhope: My Lords, I understand that point perfectly, but will the department think carefully about the suggestion that applications for reviews might also be taken by telephone?
Lord McKenzie of Luton: My Lords, I will certainly give consideration to that and raise it with my colleagues. Specifically on crisis loans, which were the focus of some attention from all three noble Lords, in October 2007, the monthly number of applications reached about 200,000, which is up from about 100,000 per month in April 2006. There has been a large increase in crisis loan applications. There has been a response to that. There has been a doubling of the resource deployed on the Social Fund by asking staff from the contact centre directorate to get involved. There has
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The noble Lords, Lord Kirkwood and Lord Skelmersdale, referred to the Norwich benefit delivery centre. All three noble Lords referred to the disparity of outcomes across the various centres. We are aware of the need for action in Norwich in particular but, in mitigation, should mention that that is a centre to which we have only recently moved that work. Therefore, to an extent, that might be seen as teething problems, but we are not complacent and need to ensure that there is good performance right across the piece.
On tackling arrears—the noble Lord, Lord Kirkwood, focused on this—community care grant applications rose during the summer months. Action was taken region by region to get those applications back on track. During October, the backlog was reduced from 24,000 to 13,500. The usual weekly intake is about 12,000, so an outstanding figure of about 13,000 means that we are nearly up to date. However, during November, there was another large increase in the number of crisis loan applications. Alongside the unusually high intake of community care grants for this month, that meant that we fell behind again. There are continuing challenges to meet the targets that we have set.
Lord Skelmersdale: My Lords, I do not expect the Minister to answer at this precise moment, but is there not an annual pattern emerging? For example, what happened in November 2005 or 2003? Was it not foreseeable?
Lord McKenzie of Luton: My Lords, my understanding is that the increase in crisis loan applications, in particular, was way beyond prior experience. Whether or not the pattern that we have seen in recent months will be repeated in future months remains to be seen, but we clearly need to monitor that.
The noble Lord, Lord Kirkwood, raised the issue of alignment payments. Of course we want to ensure that new claims to income-related benefits are paid as quickly as possible and that the minimum use is made of crisis loans in bridging the gaps. Jobcentre Plus has recently reviewed the guidance issued to staff on interim payments or payments on account, with instructions to ensure that those, rather than crisis loans, are paid when there is a delay in processing the main benefit. In addition to the written guidance, the process has been captured in the emergency payments component of the standard operating model.
The noble Lord, Lord Oakeshott, referred to the quality of decision-making. The Social Fund Commissioner’s report for 2006-07 raised as an issue the development of a quality assurance framework. We have been pleased to address that issue and in response set up a joint IRS and Jobcentre Plus working
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A number of points were raised asserting that there is a postcode lottery. There is no such lottery for budgeting loans, and since 1999 it has been possible to ensure consistent national outcomes by ensuring a national steer on the borrowing loan for budgeting loan awards, and making any adjustments needed during the year. That has meant that people in the same circumstances get access to the same award wherever they live. Crisis loans, which are of course payable only in cases of extreme urgency, are payable if other qualifying conditions are met irrespective of where someone lives, or the time of year.
The variation is most frequently raised regarding community care grants. We are keen to ensure that the availability of community care grant funding is fairly distributed between Jobcentre Plus operational units to achieve as consistent an outcome as possible in proportion to demand in those areas. In recognition of the concerns of the Work and Pensions Select Committee and the Social Fund Commissioner, my colleague James Plaskitt gave an undertaking to that committee to review the current methodology of allocating the budget. That work is currently under way, and we will feed back to that committee once it has been completed.
The noble Lord, Lord Skelmersdale, asked about fridges; they are not an excluded item. On whether people can borrow budgeting loans in several tranches up to the permitted limit, the answer is yes. I will look at the record, and if I have not covered each point raised, I will seek—
Lord Oakeshott of Seagrove Bay: My Lords, I am not quite sure why we are so worried about the time, as I do not believe that we have had an hour yet. I did not hear the Minister respond at all to the significant point made about only 4.8 per cent of telephone calls being answered and the desperate problem of access to those lines. Can he please comment on that?
Lord McKenzie of Luton: My Lords, I am sorry not to have dealt with that statistic, but I do not recognise it from the data that I have. On the current position, work has been undertaken on the whole telephony system, but I shall consult officials and write specifically to the noble Lord on that matter.
The Social Fund provides an important source of financial support, acting as a budgeting tool and safety net to help millions of people when they are at their most vulnerable. It helps them to cope with costs of large or unexpected items of expenditure. We have made significant improvements and will continue to look for further reforms. We want to support the Government’s wider financial inclusion aims—in particular, to help tackle disadvantage by ensuring opportunity for access to and use of the financial services products needed to participate fully in modern-day society and in the economy.
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Baroness Royall of Blaisdon: My Lords, before I move to adjourn, I was mentioning to my noble friend Lord McKenzie that his time was up because although I well recognise that we have not used the whole hour for this debate, it is time-limited. If we do not adhere to the time limits set then we are sometimes accused of not ensuring that the debate is properly organised. I say that by way of an explanation to your Lordships.
I beg to move that the House do now adjourn during pleasure until 8.30 pm.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.21 to 8.30 pm.]
Climate Change Bill [HL]
House again in Committee on Clause 28.
Lord Taylor of Holbeach moved Amendment No. 158:
“( ) The Committee’s report must also set out the Committee’s views on the programme for adaptation to climate change published by the Secretary of State under section 49 and its implementation, and any further action required as part of the programme.”
The noble Lord said: Our amendments seek to have adaptation issues included in the report on progress. It is illogical to focus the report purely on meeting the budgets for carbon emissions. If the intention is to get an accurate picture of our progress towards stopping climate change, we need to have a real picture of the effects of our proposals and the effects of climate change on the environment. Meeting the budget, although important, is not the only yardstick by which our attempt to save the environment should be judged. It is important that the report has some regard for the fact that proposals that are meeting the budgets might also be damaging the environment in other ways. It should be the aim of the annual report to monitor our progress in a more holistic fashion.
If proposals to reduce carbon emissions are having a negative effect on the environment in other ways, this can be stopped only if it is monitored and reported on. Admittedly, this is not as easy to measure as carbon emissions. However, it is still important to include the more wide-ranging effects of our proposals to ensure that all aspects of climate change are being addressed. If they are not, we risk hearing yearly a false picture of our attempts to safeguard the environment. We should not forget that stopping global warming must not come at the price of ruining the environment in other ways. As we on this side of the Chamber have mentioned before, the deforestation of the rainforests for biofuels is a perfect example of the way in which even well- intentioned attempts to stop climate change might be counterproductive. We intend through our amendments to avoid this sort of tunnel vision, and thus think that it is important to include in the report consideration of the adaptation to climate change and proposals to stop it. With that in mind, I beg to move.
Lord Teverson: I shall speak to Amendment No. 183B. We debated the role of the climate change committee at some length earlier today. We on these Benches do not believe that the expertise lies there for
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Although it does not need to be of the same stature and importance per se as the climate change committee, an independent scrutiny committee for adaptation is needed. In terms of climate change and climate change policy, there is a natural divide between adaptation and policy concerning stopping carbon and other greenhouse gases that cause climate change. A climate change committee can do one thing, but an independent scrutiny committee can do the other. We believe very strongly that there needs to be a mirror committee of statute concerned with adaptation. It would let the climate change committee get on with its area and this committee could look at adaptation.
In this amendment, we have listed the areas that this committee should look at. We also would want to add it—I have not included them at this stage—ecology and biodiversity in relation to adaptation, which are key areas in addition to those I have listed in the amendment. Adaptation is a key, but small, part of this Bill, yet we know that if the world was perfect we would not need adaptation. Through flooding, rising sea levels and the other indicators of climate change that we see nationally and globally, we already know that we need to have a very active adaptation programme and strategy. It is right that it is part of this Bill—the Government have put it in—but we need it to be stronger and to take up a much greater role in this legislation. As part of that, we want in a way to copy the Government’s ideas for an independent committee, but to have this for adaptation as well. This is key to the combating—perhaps not the mitigation—and the tackling of the problems that we have already stored up for ourselves over the past 50 years of industrialisation.
Baroness Young of Old Scone: I support Amendment No. 183B, which is tabled also in my name. The previous two contributors have almost made apology for adaptation, but it is not only as important as the task of reducing greenhouse gases and climate change; it will become increasingly important. We already know that the carbon out there will increase the amount of floods, heatwaves and droughts. Indeed, we are seeing floods again this week. This will become an increasingly important set of impacts with great public salience and relevance. They will be the immediately visible elements of climate change for the public.
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