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10 Nov 2011 : Column GC89

10 Nov 2011 : Column GC89

Grand Committee

Thursday, 10 November 2011.

Welfare Reform Bill

Bill Main Page
17th Report from the Delegated Powers Committee

Committee (12th Day)

Relevant document: 17th Report from the Delegated Powers Committee.

2 pm

Amendment 76ZB not moved.

Clause 53 agreed.

Clause 54 : Work experience etc

Debate on whether Clause 54 should stand part of the Bill.

Lord McKenzie of Luton: My Lords, I have given notice that I intend to oppose that this clause stand part of the Bill in order to be able to return briefly, I hope, to a subject that we have touched on before. Because of its significance, I want to clarify certain points.

Specifically, does this clause introduce a change? Is it a widening of the definition of work-related activity? If it is not, one might ask why the provision is in the Bill at all. We see merit in work placements and work experience but we are trying to understand the boundaries between them and work itself. This is important, as it is being made available and could be mandated for those in the WRAG-those found not fit for work. Are those in the WRAG currently involved in work placements and work experience? If so, what safeguards are being introduced? In particular, what guidance is given to providers in the work programme about all this, and what monitoring is undertaken? Is access-to-work funding available for work experience and work placements as for work? If not, how does that help disabled people move closer to the labour market?

I shall tag one further question on to this debate. It has been reported in the press-I know that the noble Lord is reluctant to comment on press reports-that somebody who has been in the work programme for two years and has not been in employment will come off and go into some form of community service arrangement. Are we likely to see any amendments come forward in this Bill that touch on this issue, or will that be dealt with in regulations, or is it pure speculation that we can ignore?

Lord Boswell of Aynho: My Lords, I invite the Minister to comment on the way that I construe the clause, which is that it is facilitative and increases flexibility, which seems to me very welcome. Adding to the list of questions given to him by the noble Lord, Lord McKenzie, could he also say a little about the employment status of people in this situation and, for example, their insurance and other measures of cover? I am more conscious of the situation in relation to children at school. There are sensitivities. It is important that they are got right, but the principle is a good one.

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The Earl of Listowel: My Lords, I have a quick question for the Minister. I also thank the noble Lord, Lord McKenzie, for giving us the opportunity for this short debate. I wanted to ask the Minister about mentors for these individuals-what one finds, for instance, in the National Grid programme for young offenders, which has been so successful in rehabilitating young offenders. A key factor in that is the use of mentors in the workplace.

In the Youth Justice Board they are finding a great deal of success, again by using mentors in tandem with accommodation charities, and so on. In the past, the mentoring work of YoungMinds has identified that long-term relationships with a mentor have positive outcomes for young people. One of the very effective charities working with children in schools, Volunteer Reading Help, has volunteers who commit to at least a year's work with the children.

Given the importance of mentoring, and my sense from discussions on apprenticeships that not much thought has been given to developing and training those individuals in the workplace who provided mentoring for apprentices, I would be interested to hear from the Minister now, or perhaps to have a note from him later, about how they intend to develop mentors for individuals caught by this clause in the future.

Lord Skelmersdale: My Lords, these are all clearly very relevant questions, but I would like to ask the Minister whether he construes "work experience" or "work placement" in the same way as he does "work preparation requirements" in proposed new Section 11(3)(c) in Clause 56?

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, this summer we increased conditionality for ESA claimants in the work-related activity group with the introduction of the work-related activity regulations. For the first time, those who are able to prepare for a return to work will be required to do so, where it is reasonable.

This measure is another aspect of work-related activity, and thus those groups-such as support group claimants, lone parents with children under the age of five and those with caring responsibilities-who are not required to undertake work-related activity will not be required to do work experience or work placements.

Noble Lords asked, in relation to Clause 16, whether this measure extends the definition of work-related activity, which is one of the questions asked by the noble Lord, Lord McKenzie. The Bill seeks to clarify what may be included by way of work-related activity, rather than extend its meaning. Work-related activity is already defined in the Welfare Reform Act 2007 as,

and Clause 54 makes expressly clear that this may include work experience or a work placement.

However, an adviser will only place a claimant on a work experience placement if he judges that it will help support the claimant back to work, and if it is suitable. If a claimant feels that the requirements placed upon them are unreasonable, they can request

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that the adviser reconsider whether an activity is appropriate. Claimants are also able to follow a rigorous complaints procedure if they do not think that they are receiving a satisfactory service. I hope that that explains what the formal protections are to the noble Lord, Lord McKenzie.

The focus of work experience and work placements will be on learning new skills and gaining valuable experience to get a flavour of the workplace environment. They will provide claimants who may have a limited work history with the opportunity to increase their confidence and employability. The precise nature of such placements will depend on what is deemed suitable for the individual, bearing in mind their physical and mental capabilities, and ensuring that necessary adjustments are made.

Placements would normally be short term, but there is currently no set duration, and this will normally be agreed between the adviser and the customer. Work experience and placements must be appropriate to the individual's circumstances and need not be full-time. For instance, if a person's health condition means that their mobility and pain levels improve over the course of the day, an adviser might find them a placement for two or three hours in the afternoon. This is quite different from the more challenging demands of paid work, which would normally be a longer-term and less flexible commitment with higher expectations placed on the worker.

The requirement to undertake work experience or work placements will be used flexibly by advisers as part of a range of work-related activities. It is not intended that such placements would necessarily replace other aspects of work preparation. It may be one of a number of work-related activities required of an individual which, in combination, best support a claimant to move closer to the labour market.

In response to concerns that work experience may be used to judge whether an individual is in fact capable of work, this is not the case. A claimant cannot be found capable of work unless they are found capable following a work capability assessment. This new measure will therefore not affect anyone's underlying entitlement to benefit.

On the question raised by the noble Lord, Lord McKenzie, on access to work, the answer is that it is not available to claimants undertaking work-related activity. For claimants participating in sector-based work academies, funding will be available to help with reasonable adjustments during their participation in that provision. For work experience arranged through alternative sources, reasonable adjustments will be made where necessary to ensure that claimants are able to undertake any work experience or work placement in a safe environment which meets the needs of the claimant. Where necessary, Jobcentre Plus could assist employers with reasonable adjustments, using the flexible fund which is available to an adviser.

I shall clarify the issue of job outcomes for work programme providers. Work programme providers will not be paid for work placements and, therefore, there is no incentive for the provider to encourage a claimant to undertake long-term unpaid work experience, which I think is the underlying concern that the noble Lord

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has in raising this point. Payment arises for work placement providers only if a sustained, paid, full job outcome is achieved. Furthermore, sustainment payments also ensure that it is not profitable for providers to encourage claimants to undertake unreasonable work-related activity with the aim of making them enter the labour market before they are ready, as that is unlikely to lead to a positive long-term job outcome. I hope that I have described a series of formal protections but also an incentive structure that means that this is not going to lead to any abuse or, if it did, that it would be smack against the financial incentives that we have set up.

In response to my noble friend Lord Skelmersdale's question on substitute Section 11(3)(c) in Clause 56, I can confirm that the definition of "work preparation" will be the same and will include work experience or a work placement in both clauses.

I owe the noble Earl, Lord Listowel, an answer on mentors. I wish to express our interest in mentors. I am absolutely with him on the importance of mentoring, and as he may or may not know, I have developed my own project with CSV, called Grandmentors, where we test how older, retired people can support youngsters making the transition to adulthood, along precisely that thinking. That project, which I think is one of the very few formal projects with research around it, tries to establish the real economic value to the country of mentoring. I have put my own wallet behind it. I look forward to reporting to him when I have some decent findings.

Lord McKenzie of Luton: I am grateful to the Minister for that reply. I am comforted that my concern was not so much about what providers might be up to as about whether work and work experience generally might be almost a way round the WCA for those who are otherwise in the WRAG. I think that the Minister has given us enough comfort on the key distinctions between work experience and work placements, although I note that he said that they do not necessarily need to be full time and that normally paid work would be more onerous. I accept the generality of what he says and that gives me the comfort that I was seeking. I am not sure whether he dealt with the question of employment rights, which is an interesting one, and presumably part of the distinction between work and work placements, but that is satisfactory for my purposes.

Clause 54 agreed.

2.15 pm

Clause 55 : Hardship payments

Amendment 76A not moved.

Clause 55 agreed.

Clause 56 : Claimant responsibilities for employment and support allowance

Amendment 76B not moved.

Clause 56 agreed.

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Clause 57 : Entitlement of lone parents to income support etc

Debate on whether Clause 57 should stand part of the Bill.

Lord McKenzie of Luton: My Lords, I am grateful to Gingerbread for a briefing on this issue. It has asked us to raise this matter, which I believe has considerable merit.

Clause 57 proposes to extend further the numbers of single parents required to seek work. From early 2012, single parents not in paid work and whose youngest child is aged five or over will no longer be entitled to claim income support. Instead, single parents will be required to claim jobseeker's allowance or another benefit. On JSA, single parents receive the same amount of money each week as they do on income support, but face a substantial increase in conditionality and risk a payment sanction if they fail to demonstrate that they are actively seeking and available for work.

This latest proposal is estimated to affect 100,000 single parents currently receiving income support who have a youngest child aged five or over. It is understood that the Government anticipate this will save something like £50 million in 2012-13 by removing entitlement to income support from this group of single parents. However, I wonder if there is any revision to that sum, given the state of the labour market and the difficulties that are confronted by people seeking work.

We have an opportunity to introduce a delay to the proposed change and instead align it with the planned introduction of universal credit from 2013. This can be achieved by simply removing this clause from the Bill, which is what this amendment seeks to do, and would mean that single parents with a youngest child aged five would continue to receive income support until universal credit is implemented. At this point, single parents, along with responsible carers and couple families, will be subject to work search and work availability requirements, as outlined in Clause 22; that is, "all work-related requirements".

Noble Lords will be aware that Clause 57 is an extension of the lone parent obligation policy which we brought forward when in government. The LPO restricts entitlement to income support for single parents according to the age of their youngest child. The reforms have sought to move more and more single parents from income support to JSA. Implementation began in November 2008 and first affected parents whose youngest child was aged 12 and over in October 2009; parents with children aged 10 and 11 were also transferred to JSA. In October 2010, single parents with children aged seven, eight and nine switched into JSA. In previous years, single parents have been given clear advance notice of six months in order to prepare for the switch from income support to JSA. However, we have not yet passed this piece of legislation and this will be implemented in April 2012, which is certainly in the near term.

Some 57 per cent of single parents are in paid employment and many more want work as a means of increased income and financial independence. Those are key motivators, along with personal independence,

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the opportunity for social interaction and to set a good example for their children. Indeed, 42 per cent of single parents say that having almost any job is better than being unemployed and on benefits. Critically, single parents require jobs that allow them to be there for their children when necessary. With only one parent to do the school run, care for children when they are ill and support them with their schoolwork, jobs with flexible working patterns are absolutely vital, as is access to affordable, high-quality childcare. We have discussed that on a number of previous occasions. Flexibility does not just mean part time but can include job share, compressed hours in term time and annualised hours. However, employment opportunities that provide the degree of flexibility that single parents need are few and far between, particularly in difficult economic times.

The particular reasons for delay are as follows. On 7 October this year the Government announced an extension of childcare support to those working under 16 hours to be implemented as part of universal credit from October 2013. Currently, through working tax credits, as we are aware, single parents working 16 hours or more a week can access support of 70 per cent of their childcare costs up to £175 per week for one child and up to £300 per week for two or more children. This provides vital support to working parents on low to middle incomes and makes all the difference as to whether they can make work pay. However, it has always been a challenge for those with caring responsibilities or those who have been out of work for some time to make the leap from no work to 16 or more hours a week. So the further investment to provide childcare support at the same level for those working under 16 hours a week from 2013 onwards is welcome. This support will be of particular benefit to single parents of five and six year-olds who move on to JSA from income support after a period of time looking after their child. That is why it makes no sense to push 100,000 single parents into this position 18 months before the new childcare support is available.

In addition to the logic of delaying the switch from income support to JSA to enable single parents to access the new childcare support that will be available under universal credit, I suggest that there is a broader rationale in aligning this change with the overall implementation of universal credit. The transition from the current benefits and tax credits system to unified universal credit will require a huge administrative change in order to transition all existing claimants on to the new system. When resources are stretched, it would therefore be both needlessly disruptive to single parents and an unnecessary cost to the state to put the same group of claimants through two substantial administrative processes within a relatively short period of time-ending entitlement to income support in early 2012 and then a migration on to universal credit for existing claimants from April 2014.

It is also important to note that the Bill we are considering introduces changes that will affect the job search requirements of lead carers in couples families which will be implemented from 2013 as part of universal credit. From this point on, nominated lead carers in joint couple claims will be required to seek work when the youngest child reaches the age of five and be

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subject to increased conditionality accordingly. There is therefore no clear rationale for why single parents should be subject to identical changes in advance of nominated lead carers in a joint claim.

According to the Office for National Statistics, in the three months from June to August 2011, unemployment rose to 2.57 million, an increase of 114,000. The fall in the number of people employed was 178,000 and has been particularly driven by the loss of part-time jobs, down by 175,000. Single parents rely heavily on part-time work as this allows them to juggle their caring responsibilities with work. The total number of people claiming JSA is 1.6 million, of which 124,000 are single parents. The total number of single parents claiming JSA increased by 48,000 over the 12 months from August 2010. Unemployment is at a 17-year high and job creation in the private sector has so far failed to plug the rising tide of redundancies and job losses in the public sector. Overall, the picture is bleak, with markedly fewer family-friendly jobs available and increasing numbers of single parents trapped on jobseeker's allowance, so moving an additional 100,000 single parents from income support to JSA when their youngest child reaches five is a blunt instrument in the current economic climate.

Increased conditionality and tougher sanctions only serve to add unwarranted pressure on single parents when suitable employment opportunities remain sparse, childcare costs continue to rise faster than earnings and single parents are not able to take advantage of new childcare support that will be introduced from 2013. Single parents will struggle to find work that is sustainable and that fits around their caring responsibilities when faced with increased conditionality, limited access to support for childcare costs, limited opportunities to access training and further education, low growth and a stagnant job market. I oppose the clause standing part.

Baroness Lister of Burtersett: I had not planned to speak but I support the opposition to the clause standing part. It seems eminently sensible that we should postpone this provision. I am prompted to speak by a rash of e-mails that I received today from people who clearly feel strongly about it, although I shall read from only one of the e-mails. However, I am ambivalent about the issue of lone parents and paid work. On the one hand I was a member of the Commission on Social Justice which, to a lot of criticism, recommended that lone parents with children aged 12 and over, I think, should become part of the workforce. One of the reasons for that, as my noble friend said, is the importance of paid work to women as a source of independent income and so forth. On the other hand, it also worries me that much new policy underestimates the importance and value of care work and the time and energy it takes. So, as I say, I am ambivalent. However, I think that lowering the age to five is perhaps going too far. It is putting a lot of strain on lone parents in terms of the competing responsibilities that we are placing on them. That is very much reflected in the rash of e-mails that I received today. I shall read out from one. I do not necessarily agree with everything in it but it reflects what people are feeling. This e-mail is in fact not from

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someone directly affected but from a grandmother who would have been affected had this rule applied earlier. She says:

"I have been informed that you are discussing legislation which will force mothers who are [on] welfare to look for a 'job' when the youngest is five years of age. I am a grandmother now but raised three children on welfare following marriage breakdown. It was not a lot of money but I had control of it"-

an issue that I have been raising in other contexts-

I myself would not put it this strongly-

I think that we should be conscious of that point on exhaustion. We are asking an awful lot of lone parents. She continues:

"How are children supposed to develop with any feelings of confidence and security if they are constantly shunted around from pillar to post, treated as if they are an encumbrance, rather than being valued by the society".

I shall not read any more. However, there is a feeling that we are devaluing the work of caring for young children whether it is done by mothers or fathers. This opposition to the clause standing part would allow us to pause and think again about whether this is the right way to go, particularly in the current labour conditions, and whether it would not be better to wait until universal credit is introduced and the childcare changes referred to by my noble friend are made. I hope that the Minister might be willing to pause and reflect on this matter.

2.30 pm

Baroness Turner of Camden: I, too, oppose Clause 57. I have not got a great deal to say on it. I agree very much with what the noble Baroness has just said. We have had debates about this on various Bills in the past, but you cannot discuss this without also considering what arrangements are made for child support. It is all very well to get women back into the workforce, and many women would like to go back into the workforce as soon as they feel that their children are able to be looked after, but you cannot look at one thing without also looking at child support, and I am not certain that this Bill in any way makes sufficient arrangements with regard to child support. Leaving out Clause 57 will give us time to think again. There is quite obviously a difference between seven and five. It gives a little more time to think about it in the way that the noble Baroness has just indicated.

The Earl of Listowel: I am reminded of an article recently published on the BBC website reporting on a survey about children reading with their parents. It reported that:

"For the majority (71%) reading with their child is one of the highlights of their day. But the poll of over 1,000 parents found 18% felt too stressed to do so. Two-fifths (41%) said that a child's tiredness stopped reading together being fun, while 30% cited

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their own tiredness as a problem. More than a third (36%) of the 1,011 survey participants said they were too tired to spend longer reading".

Teachers were also surveyed:

"Nearly three-quarters of those surveyed (72%) attributed developed language skills and more advanced reading levels to those children who regularly enjoyed a shared book time with parents at home".

The evidence is very clear that the home environment is the key experience for children in getting the best outcomes for their education, so we need to think about parents not having the energy after a long day's work to spend that important time, particularly, perhaps, at the ages of five, six and seven, reading with their child.

I refer to an e-mail sent to me today by a primary school teacher. She wrote:

"Commuting up to ninety minutes a day would mean that I would have to leave my son in childcare and school from 7.30 am to 6.30 pm everyday ... I am a primary school teacher in London and I see the affects of long term childcare on children. Some only see their parents for an hour each day or only at weekends!".

The last time I worked with children-in a summer play scheme five years ago-what was particularly striking was that there were children who arrived early at the play scheme for breakfast and there were those who stayed until the end. These children in particular seemed a bit tired, a bit down and flat, so I can understand the concern that as the Government are implementing this, the adviser should very much keep in mind not only whether the parent is working but whether the parent will have a long commute there and back and the child will have a very long day at school, starting early and finishing late. Advisers should keep this in mind when they are considering whether a person has to take a job.

I am sorry to take so long, but to round up, I share the concerns. If there is anything that can be done to mitigate the impact on lone parents with children of this age, I would welcome it. There is a real question about the quality of childcare available. Research has shown that parents have traded quality off against affordability. They have understandably been so desperate to find childcare that the pressure to raise standards has not been as high as it might have been. In the current economic climate, with the great need for childcare, the Government have understandably been lowering the requirements for the education and training of managers of children's centres, for instance. There is this constant pressure: we need more childcare places, so there is pressure to lower standards. One should listen very carefully to parents who say to their adviser, "I don't have faith in the childcare in my locality". One needs to give that weight, particularly in Northern Ireland, Scotland and Wales, where the Childcare Act 2006 does not apply and they have not necessarily got the push on greater provision that we would want. I hope that the Minister can give some reassurance on these points, and I look forward to his reply.

Baroness Howe of Idlicote: My Lords, I had not intended to speak but, listening to the debate, I think that the opposition expressed by the noble Lord, Lord McKenzie, would provide the necessary time to reconsider the effects that the Bill will have in this respect. I also agree with my noble friend that the business about child support is a problem. Quite apart from the cost,

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the quality has come under quite a lot of doubt recently. The major point that I want to make is about stress on parents. I invite your Lordships to think about how stressed all of you have been by the extensive amount of work we have all had to consider recently, and bear that in mind when you come to consider whether or not to support this amendment.

Lord Freud: My Lords, with regard to the point made by the noble Baroness, Lady Howe, on how we could take it slightly easier, I regret that I cannot apply it to myself because my children have gone way past that age, although they do not seem to be any less stressful.

Our policies for lone parents are based on the key principle that work is the surest and most sustainable route out of poverty. In June last year we announced our intention to align the age at which lone parents could reasonably be expected to work with the time their youngest child enters school. Current legislation, yet to come into force, provides that income support must be made available to lone parents with a child under the age of seven. This clause lowers that age to five so that lone parents with children aged five or over will no longer be entitled to income support solely on grounds of lone parenthood. We would effect this change through regulations, and implement it drawing largely on the experience of having progressively lowered the age from 16. Support for these lone parents will be available through jobseeker's allowance or employment and support allowance if they meet the relevant conditions of entitlement, or through income support if they qualify on grounds other than lone parenthood, most notably if they are carers.

We want to encourage lone parents to enter work but not at the expense of the crucial role they play as parents. We intend to carry forward the current safeguard that allows those with children aged 12 or under to restrict their availability for work to school hours. It is worth reminding noble Lords of the powerful impact that this policy has. When the age was brought down to 12, 16 per cent of lone parents leaving income support went straight into work and 56 per cent went on to JSA, many of whom will have subsequently gone in to work. We estimate that bringing the age down to five could lead to an extra 20,000 to 25,000 lone parents in work. Children in workless lone parent households are almost three times more likely to be in relative poverty than those where the lone parent works part-time, and five times more likely to be living in relative poverty than children of lone parents working full-time.

The noble Lord, Lord McKenzie, asked about flexible work. The Government are keen to promote flexible working and have a strong commitment to greater family-friendly working practices. We have committed in the coalition agreement to consult on extending the right to request flexible working to all employees. The public consultation process ended recently and we intend to respond to the comments by the end of the year. We understand that stimulating real culture change to make flexible working practices the norm across the whole labour market requires more than just regulatory change on the right to request. There also needs to be help for employers to operate in a more flexible way and demonstration of the benefits it can bring to them

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and their employees. The Government have a role in leading culture change. This is why we are working with business leaders and employers to promote the business case for flexible working and ensure that employers know where to go to find support to implement practices in their organisation.

This clause also amends Section 8 of the Welfare Reform Act 2009, which relates to the possibility of requiring work-related activity from certain lone parents with children aged under seven. Section 8 as it stands would require regulations in this respect to be subject to the affirmative resolution procedure. This clause lowers that age from seven to five, in alignment with the lowering of the age for withdrawal of income support on grounds of lone parenthood alone. The key question asked by the noble Lord, Lord McKenzie, was whether it is right to make this change now rather than waiting for the introduction of universal credit. Introducing this change before introducing universal credit will help more lone parents into work, with knock-on reductions on child poverty.

A recent evaluation of lone parents' experiences of moving into work also found that working had had a number of positive effects on their children, both direct and indirect. These range from children having the opportunity to go on school trips because of extra family income to observing the good example of a working parent and greater independence, both financially for the parent, once in work, and for the child, in terms of their role in the household. Help with childcare costs is currently available through tax credits and the flexibilities in JSA mean that childcare responsibilities are taken into account. There are a range of flexibilities available: lone parents with a child aged under 13 can restrict their job search and availability to their child's school hours, while lone parents will not be sanctioned for failing to meet requirements if they had good reason for the failure. Access to appropriate childcare will be taken into account before a decision is made.

On the state of the economy, we have to bear in mind that even in difficult times-which I accept that we are in-Jobcentre Plus holds an average of 275,000 unfilled vacancies at any one time, around a quarter of which are part-time opportunities. Clearly those figures are a snapshot which hides the number of new job opportunities that come up all the time. On average, about 10,000 new vacancies are reported to Jobcentre Plus alone every working day, while many more come up through other recruitment channels. It is not worth getting into a huge debate about the meaning of these figures but, as noble Lords understand, much of our approach to the work programme is aimed at trying to help the people who have not managed to get a job reasonably early back into the market. As the numbers of unemployed get bigger, one factor we are looking at is the average length of time that people are unemployed. As I say, there are flows all the time and many lone parents have excellent opportunities to find a job. Even in difficult times, there are still jobs going. On that basis, I commend Clause 57 to the Committee.

The Earl of Listowel: My Lords, I thank the Minister for his helpful reply. I want to check with him about the question of school hours. Does that really mean

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"school hours", and will the adviser take into account that the person will have to travel for an hour or an hour and a half to get to work, and back again at the end of the day, so that it will go over school hours? Does it also mean that if a job requires someone to work in the school holidays as well, that will be seen as an inappropriate job for that person? I would guess that it clearly means that, but I would appreciate a response to my first question.

Lord Freud: On working in school hours, it is quite clear that the working includes the travelling time. It is incorporated in that and it is clear in the legislation. To refer back to the noble Lord's earlier reading of the e-mail, I could not resist making the point that we still remain grateful to the Egyptians for inventing papyrus. Maybe in another couple of years we will have dumped it.

2.45 pm

Baroness Sherlock: My Lords, perhaps I may pick up on the second part of the question asked by the noble Earl, Lord Listowel. Would someone be required to work during the school holidays? I shall let the officials think about that while I pose a couple of other questions. I was pleased to hear the noble Lord say that the Government appreciate that there are two objectives here: the care of children and the importance of work. He has explained the figures and the research the Government have done into the impact of work. Can he share with us their research into the impact on children of parents working at the point at which they have to make the transition into school?

Lord Freud: My Lords, I cannot bring to mind a particular piece of research on that question, but I suspect that the noble Baroness, Lady Lister, probably went into this in great detail when she was working on her piece of research for the CSJ. If I can find something which pinpoints that particular question, I will certainly give the noble Baroness the reference. But the general point I sought to make is that a range of research in this area shows the great benefits for families of working, and if I can give a particular answer to her question, I will.

Baroness Lister of Burtersett: I suspect that that was research done for the department by Millar and Ridge. It absolutely did show positives, but it also revealed some of the strains placed on mothers and on children. If I remember rightly-I have to admit that my memory for research is waning-in some cases mothers moved out of work again because of those strains. The research showed both sides of the issue.

Lord Freud: Let us not debate research none of us can remember. I will have a look at this and if I can provide anything more solid, I will do so. On the point about school holidays, under the regulations, if a lone parent had to leave a job because no appropriate childcare was available in the holidays, that would be taken into account for good reason. Technically it is good cause, but it would become good reason.

Baroness Sherlock: My Lords, I am so sorry, but in that case I need to clarify this. As I understood it, the question posed by the noble Earl was not whether

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someone would be sanctioned for being unable to get suitable childcare, but whether they would be allowed only to choose to take a job that enabled them to stay at home with their children during the holidays. The summer holidays last a long time and children might never see their lone parent during working hours. I think the point that the noble Earl was trying to clarify is this: if I am a lone parent and the only job I can find is one that requires me to work during the school holidays and I do not take it, is that good reason?

Lord Freud: I think it would be good reason. As I have just said, if someone cannot find appropriate childcare in the holidays-

Baroness Sherlock: My Lords, I am so sorry, but I must be expressing myself badly. I am assuming that childcare is available during the holidays, but if for reasons due to my own strange peccadilloes I want to spend the holidays with my child and the only job available is one that would require me to work all year round-during school hours in term time is fair enough, but also during school hours in the holidays-in those circumstances would I as a lone parent have to take that job, even if it meant that my child would have to spend the whole of the school holidays in childcare? Would the noble Lord clarify that point?

Lord Freud: Yes, my Lords, the picture the noble Baroness draws is correct. If a job is available and there is appropriate childcare, the lone parent would be obliged to take that job.

Baroness Sherlock: I thank the noble Lord for that clarification, if not for the answer, which I am very disappointed with. I accept that the noble Lord does not have research on the question of transition available to him at the moment. I just want to lodge a concern that the point of transition for children either moving into school at all or moving from junior to secondary school is difficult, and there is research out there to support that. The research looks at the impact in later life if those transition points are not well handled. I would be grateful, before we get to Report, if the noble Lord would give some thought to whether he could give us some comfort that the Government would want to give a clear policy steer that they would expect their advisers to look kindly on lone parents who, for good reason, want to support their children during the key transition point into school. I have one final question. If a five year-old were not in school-I will not go into it; there may be reasons why a five year-old may not yet have started school-would that lone parent still be required to go out to work?

The Earl of Listowel: My Lords, before the Minister replies, can I say that I am very disappointed to hear that lone parents with a child of six or seven who cannot find a job except one that occupies them during the school holidays as well, will be obliged to take a job under the new arrangement. That was not my understanding from my reading on this and it seems very disappointing that that is the situation. I would appreciate if the Minister would double check to be

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very clear on this particular matter. If he has done so, and he is clear on it, then in that case I suppose I will have to read Hansard again.

The other matter is about transitions in school. A point that is always emphasised to me is that the transitions into primary school and from primary into secondary school are key to the success of a child's education. We need to ensure that we do not do anything to make those transitions more difficult. If there is research there that we can identify, maybe the Minister might be able to help with that, or perhaps he could undertake to look very carefully at this particular area. It would be helpful if he could see whether there is any adverse impact caused by the changes in terms of the transitions of children into primary school.

Baroness Hollis of Heigham: My Lords, could I also ask a question, which is to turn the comments and questions made by the noble Baroness, Lady Sherlock, around the other way? If a lone parent has found a job as a dinner lady, precisely because her hours fit those of her young children, and she is therefore not being paid and not working over the holiday periods, is she at all exposed to the issue of work conditionality?

The second issue is on transition. Again, speaking from personal experience-and we all brought our children through school-many children sail through and love that first year of school. However, many children who suddenly go into what they regard as "big school" can find it very stressful. They revert to bed-wetting, have disturbed nights, are fearful, actually hide under the table when the school bus comes, and so on. In those situations, the lone parent needs to be on hand and available to go into the school if necessary, to collect the child from the school, during that first year of settling down. Most of us can talk from personal experience in that respect. The noble Lord would be very wise to listen to the point about transition-whether it is for one year, or ideally for two years, before the full conditionality comes in.

Lord Freud: My Lords, on the first question on whether the child happens not to be in school on their fifth birthday, there will be a small number of lone parents that we are aware of whose youngest child is aged five but who has not yet started school. We are therefore going to expand the existing flexibilities within jobseeker's allowance to support these lone parents through the short period of time until their child enters school or reaches compulsory school age, whichever comes sooner.

On the question raised by the noble Baroness, Lady Hollis, about the dinner lady-people who are employed through the school year-where the dinner lady is presumably on a contract through the process then clearly she has a job and would escape conditionality in holiday periods because she would be working in a long-term job. As one gets to short term fillings-in I expect that it becomes a bit more detailed and dependent on particular circumstances. The broad position, however, would be that they would be within the job for that period.

Baroness Hollis of Heigham: Thank you, I am very grateful for that. If I understand the Minister rightly, that means that through the period of the school

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holidays, for example, the dinner lady will go up the ladder-or down, whichever way you want to put it-to increase the amount of universal credit during that period, to compensate her for lack of income, and it would then be readjusted when she goes back to being a dinner lady in the school term.

Lord Freud: Yes, the noble Baroness is way ahead of us, as usual, as we structure how we do the universal credit. We are currently looking at that very closely in terms of how we do it. We have not settled this, but my view is to look at it in fairly cash-in-the-month terms, as she is implying. That is where I would come from as we started to devise it. However, I cannot give a commitment or go further than say how we would do that. I am not keen to elaborate averaging-out processes because I think that gets overcomplicated.

Baroness Lister of Burtersett: I am very grateful to hear that. In order to dot the "i"s and cross the "t"s, could the noble Lord confirm that a dinner lady, or someone in that position, would not be subjected to in-work conditionality rules? The fact that there is a contract means that they are still in work. I may have misunderstood.

Lord Freud: Let me just try to pin down the point on transitions and whether people should be in work. There is little evidence relating to the effects of maternal employment on children's cognitive and behavioural outcomes in the UK, but what there is suggests that there are few negative effects of maternal employment once the child is aged over 18 months. If I can find some more research, I shall get it to noble Lord post-haste.

Baroness Sherlock: I will not trade research, but I think it would be helpful to come back to this on Report. I just want to put down a marker that some of the research around the impact of maternal work centres around two things. The two outstanding issues are, first, the quality of substitute care and how you control that in evaluating the impact on child development; and, secondly, the degree to which the mother wishes to work, which has always been a significant issue. There has been some work suggesting that if the mother wants to work, the effect on the mother can be positive, and that that is communicated to the child and, if that is not the situation, the opposite is communicated. Until now our regime has not required lone parents or partners to go out to work against their wishes in those circumstances. Obviously it is a little harder to do. Perhaps in his research the noble Lord might look at what might be the nearest parallel to that. Perhaps we should have a coffee and discuss research at a later date.

Lord Freud: The point that the noble Baroness, Lady Sherlock, makes is an incredibly complicated and central one because people's way of thinking about themselves is shaped by many things, not least by the expectations that others and the state have on them. We are trying to develop a really complicated socio-psychological set of impacts with the system. There is not an easy answer. We are trying to make

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people want to work because that is the expectation and that is the norm. That is what we are trying to achieve with our reforms.

Baroness Sherlock: My Lords, I understand that. The fact is that the noble Lord is not trying to make people want to work but telling them that they have to work. The evidence may be complicated. For me, the point of the objective is simple. I do not think that the state should be substituting its judgment for that of a parent of a young child as to when it is better to go out to work. That should be left to the parent.

Baroness Hollis of Heigham: Perhaps I could reinforce a point. We know from all the research, going beyond Jane Millar right back to the American research, that a lone parent who goes out to work and retains that work, if it is sustainable, benefits from the lift out of poverty. I entirely accept that that is important for the family as well as for role models. However, that is possible if and only if she has childcare that she trusts. Very often that childcare is from a family member, who is often a grandparent. The grandparent can address the problems of the child in the transition period and so on. Yet time and again we are doing nothing to recognise the role that grandparents may play and instead we are going to impose in-work conditionality on them, taking them out of the caring function that they would voluntarily and willingly embrace for everyone's benefit. We will expect two generations to work and for the child to be somewhere out there.

Lord McKenzie of Luton: My Lords, I thought that this started off as a relatively straightforward debate, but I am delighted that it has expanded into a huge philosophical debate which is very important. I thank all noble Lords who have spoken at least in support of the opposition to the clause. I think that some would go quite a bit further but there are important issues around childcare, the time spent with children, the propensity of the mother to want to work and the quality of substitute childcare. In one way or another, each of those has been touched on by noble Lords. I think that it was the noble Baroness, Lady Lister, who expressed the view that she was not totally signed up to the concept of lone parents in work when their children are as young as five, and I acknowledge that.

3 pm

The noble Lord, Lord Freud, made the point that the thrust of the policy rests on the fact that helping lone parents into work is generally their best route out of poverty, is good for their self-esteem and all of that. We are signed up to that. Indeed, it was our Government, possibly with advice from the noble Lord, who started us down the path of reducing the age.

My opposition was quite specific. It was not about changing the age of five-there may be arguments for that, and that may be something that people will wish to return to later in our proceedings-it was simply deferring its implementation for two exceptionally sound reasons. One is that there has to be another transfer to universal credit before too long anyway, so why go through those two administrative processes with all the upheaval and costs that must be associated

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with them? The other is related to issues of childcare. The Government have introduced, or are going to introduce, improvements in some respects, so why not transfer parents from JSA when those improved childcare arrangements exist? Why push them through two different sets of arrangements?

As for available jobs, there is always churn in the job market. If the figure is down to 275,000-I can remember days when one would routinely quote 400,000 as the number of vacancies available through Jobcentre Plus at any point in time-the noble Lord must accept that there is a very restricted labour market out there at the moment. Forcing something like 100,000 lone parents to confront that, we would suggest prematurely, does not seem particularly wise.

I think that we have taken the debate as far as we can today. I am sure that it will be returned to at Report, and possibly more robustly than merely seeking the deferral which this clause suggests. If the Minister wants to quit while he is ahead on this and not face that, I invite him to do so here and now.

Clause 57 agreed.

Clause 58 agreed.

Clause 59 : Claimants dependent on drugs etc

Debate on whether Clause 59 should stand part of the Bill.

Lord McKenzie of Luton: My Lords, this is by way of a serious probe to understand the Government's plans and their progress on supporting individuals with drug and alcohol dependency. Clause 59 essentially removes the regime set out in the Welfare Reform Act 2009. Those involved in considering that legislation will recall that it ended up in a considerably better place than where it started. The noble Baroness, Lady Meacher, who is not in her place, should be able to claim considerable credit for encouraging the Government of the day to move from where they were to where they ended up.

The thrust of those provisions involves requiring claimants in the JSA regime to take part in a substance-related assessment where there are reasonable grounds for suspecting that they have a drug dependency which affects their prospects of obtaining or remaining in work. The jobseeker's agreement is suspended if the individual engages in a voluntary rehabilitation plan. Such a rehabilitation plan could involve submitting to treatment, possibly at a specified institution. In the event of somebody failing to engage in such a plan, a mandatory plan could be imposed, but the legislation is very clear that such a plan cannot require a person to submit to medical or surgical treatment. A similar regime is provided for in the legislation for people in the work-related activity group but not, of course, the support group. Perhaps the Minister can remind us what, if any, regulations to introduce these measures were eventually promulgated-none, I suspect.

The information pack provided with this Bill states:

"It is considered that provisions from the Welfare Reform Act 2009 are too narrowly focused, impractical and expensive. In December 2010 the Government published a Drugs Strategy outlining first steps to ensuring the benefit system supports

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effective engagement with recovery services, which is considered to be more successful than coercion. For these, existing powers can be utilised".

Perhaps the Minister can set out for us how the first steps are progressing.

On the Government's drugs strategy, page 23 says:

"The first step is to ensure that the benefit system supports engagement with recovery services. We will offer claimants who are dependent on drugs or alcohol a choice between rigorous enforcement of the normal conditions and sanctions where they are not engaged in structured recovery activity, or appropriately tailored conditionality for those that are. Over the longer term, we will explore building appropriate incentives into the universal credit system to encourage and reward treatment take-up. In practice, this means that those not in treatment will neither be specifically targeted with, nor excused from sanctions by virtue of their dependence, but will be expected to comply with the full requirements of the benefits regime or face the consequences. Where people are taking steps to address their dependence, they will be supported, and the requirements placed upon them will be appropriate to their personal circumstances and will provide them with the necessary time and space to focus on their recovery".

Clearly, the availability of support services will be key to this approach. Perhaps the Minister can give us an assessment of what is currently provided and available. The provisions that are being removed from existing legislation contain powers to extend the application to alcohol. Perhaps the Minister can say what the Government have in mind for those with an alcohol dependency; what services are available and what assessment has been undertaken.

The 2010 drugs strategy also says:

"We will also look at amending legislation to make it clear that where someone is attending residential rehabilitation and would be eligible for out-of-work benefits, they will be deemed to have a reduced capability for employment and will therefore be automatically entitled to Employment and Support Allowance".

Is this still the plan and where is the legislation that provides for that? Presumably entitlement would cease after 365 days, maybe earlier if the claimant has a partner with modest income or capital. Whatever the limitations of the 2009 legislation, it provided a range of protections for individuals: a substance-related assessment could only be conducted by an approved person; relief from certain tests if the claimant provided a permissible sample, but not an intimate sample; an absolute bar on having to submit to medical or surgical treatment; protections concerning supply of information; and protection in criminal proceedings in respect of information provided about drug use. How will these issues be addressed in the new arrangements?

I should also be clear that we share a common goal of supporting people to live a drug-free life. An opportunity to get and sustain a job is an integral part of helping to achieve this, but we are entitled to know and have on the record what the Government plan in this regard.

Baroness Hayter of Kentish Town: My Lords, I will add a few more words on the 2010 drugs strategy. I very much welcome its view that the benefits system should support effective engagement with recovery services. It considers that this is more successful than coercion-a view that I strongly hold. As my noble friend said, the strategy covers all drug problems, including the severe misuse of alcohol. About 400,000 benefit claimants-about 8 per cent of all working-age

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claimants-are dependent on drugs or alcohol. I welcome the strategy of increasing the number of such claimants who engage with treatment and rehabilitation and go on to find employment.

I will ask a little more about the plan, quoted by my noble friend Lord McKenzie, about the choice between vigorous enforcement of the normal conditions and sanctions where claimants are not engaged in structured recovery activity, and appropriate tailored conditionality for those who are. How will that conditionality be decided?

My bigger question is: how can such claimants engage in structured recovery activity when the result of government cuts is that there are ever fewer agencies offering structured day programmes or any other form of treatment? I declare an interest as a trustee of Camden-based CASA. The noble Lord must pass it every day on his way back home. For 27 years CASA has provided in Camden a range of services for alcohol and drug misusers and their families.

Our dual diagnosis service for those with mental health and alcohol misuse problems has been ended. Our families service has been curtailed. Our older persons service has been halved. Our back to employment service has been closed. This month we had to shut our Camden day service centre in Fortess Road, which was well known, and sell the building. Many of our staff were made redundant and our premises were closed. That is the impact of the cuts on local government and other potential funders. My question to the Minister is not about the intention behind this, but about where people will get the services and the help that they need to be able to respond to the strategy. Furthermore, with the Government's withdrawal of 100 per cent of its grant to the National Agency on Alcohol Misuse-Alcohol Concern, as it is known-which I set up at the Government's behest and with government money in 1984, who will help set up, co-ordinate and make known such services to the claimants who need them?

I would also like the Minister to tell us how those for whom structured recovery activities are appropriate will be identified. Also, how is structured recovery activity to be defined? I have been trying for 27 years to define it for our clients and have failed. I do not mean that as a joke: it is very difficult because it is a highly personalised service. I would be interested to know the Government's definition of structured recovery activity. We also know that the drug co-ordinators who were responsible for building the relationship between Jobcentre Plus and external agencies in the drugs field, such as treatment and probation services, have now been abolished. Who is expected to co-ordinate the work of Jobcentre Plus with the providers of these services in their local community?

The impact assessment for the drugs strategy states that:

"Employment support will be funded on an outcomes basis, using benefit savings freed up when people engaged with recovery services move into employment or full-time education".

The assessment suggests that this funding provision will be delivered via the work programme. Will the Minister tell us what proportion of work programme providers are offering support with drug and alcohol

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issues, and how many people have accessed the support? Furthermore, as I hear that St Mungo's and other voluntary agencies are receiving none of the anticipated referrals from the work programme, can the Minister outline where such services are being provided and where participants are being signposted to?

3.15 pm

The Earl of Listowel: My Lords, at the last Conservative Party conference the right honourable Iain Duncan Smith talked about 1 million children in this country being born into families where the parents are either substance misusers or misusing alcohol, so clearly it is key that we address this problem from the point of view of the welfare of children. Perhaps this is a good time to offer my congratulations to the Government's drug treatment agencies and the UK Border Agency on the reduction in the use of class A drugs in recent years. However, it is still a very significant problem, while of course alcohol figures strongly in incidents of domestic violence, which is terrible for children to experience. So I hope that the Minister can give a strong assurance in his reply that robust mechanisms will be in place to offer help to job applicants who are suffering from these issues because a lot of the current provision is being cut back due to the recession. Particularly, how is capacity in the voluntary sector being harnessed in order to make the best use of those resources? I look forward to the Minister's reply.

Lord Freud: My Lords, Clause 59 repeals provisions introduced by Section 11 of and Schedule 3 to the Welfare Reform Act 2009. These provisions would have applied to claimants of jobseeker's allowance and employment and support allowance where their dependence on alcohol or drugs affects their prospects of finding or remaining in work. The regulation-making powers inserted by Schedule 3 to the 2009 Act could have been used to require JSA claimants to undertake a range of activities, including answering questions about whether they are dependent on or at risk of misusing drugs, and attending drug-related assessments or drugs interviews that would involve testing unless the claimant agreed to provide a sample that could be tested. Claimants could then enter a voluntary rehabilitation plan which might involve treatment. If claimants did not agree to enter the voluntary rehabilitation plan they could be required to enter a mandatory rehabilitation plan. Although a mandatory rehabilitation plan would not require a claimant to undergo treatment it could, for example, require the claimant to attend an educational programme or take part in interviews and assessments. These provisions also extended to alcohol dependency. Equivalent provisions were introduced for ESA claimants who are members of the work-related activity group. The mandatory requirements would have been enforced by using regulation-making powers to sanction a claimant's benefit if they failed to comply.

These provisions, as the noble Lord, Lord McKenzie, suggested, have never been commenced. The previous Government produced draft regulations for a pilot scheme to run for two years from October 2010. Those regulations were considered by the Social Security Advisory Committee in March 2010. The committee's report, published in May last year, raised significant

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concerns. It recommended that the pilot scheme should not go ahead as drafted. The committee considered that the pilots were unlikely to be effective, contained a number of significant flaws and would not produce robust results. Having listened to SSAC's concerns and having undertaken their own work on drugs, in December last year the Government published their drugs strategy, Reducing demand, restricting supply, building recovery. The strategy recognises that work is a key contributor to sustained recovery from addiction, but we also recognise that the previous Government's approach of mandating drug testing and assessments, and requiring claimants to undertake a rehabilitation plan on pain of losing benefit, is not the right one. We say it is not the right approach in particular for the following three reasons.

First, it mandates claimants to do something, such as being tested for drugs, that is not directly about helping people to approach the labour market. That does not mean that entering treatment is not the right approach to help many claimants who are substance dependent to address their barriers to work, but-and this leads to my second reason-claimants enter treatment for a series of complex reasons, and whether or not they succeed also depends on a series of complex reasons. Forcing claimants to answer, for example, questions about possible drug use, requiring them to attend substance-related assessments about drug use and insisting that claimants enter a mandatory rehabilitation plan if they decline to enter treatment voluntarily would be asking them to do something a large proportion of them would not want to do. If we took the approach of the previous Government, we would create a high risk of those claimants immediately failing these requirements and having to be sanctioned.

Perhaps I could pick a trick that the Opposition have enjoyed using on me on occasion. I am aware that there may have been some differences within the previous Government regarding their attitude to this legislation. I am enjoying watching on the faces of some of the people opposite a similar smile to the one that I sometimes have to use.

Finally, we consider that the previous Government's approach towards substance or alcohol-dependent claimants would be one that all the evidence from treatment providers and agencies who are experts in this area, as well as SSAC which consulted with those organisations, say would not succeed.

On the question asked by the noble Lord, Lord McKenzie, about our alcohol strategy and what service will be available, the Department of Health will be publishing a new alcohol strategy early next year which will set out what services we plan to have available.

Baroness Hayter of Kentish Town: Perhaps I may ask the noble Lord when is "early next year". I know that he likes dates. I had understood that it was going to be by the end of this year, but he is bringing us fresh news, if it is to be early next year.

Lord Freud: My Lords, I like to be able to flesh out these adverbs-no, they are not adverbs. My grammar is slightly frail. The answer is that I cannot be any more specific. If that is news, I am not in a position to provide any more definition.

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Clause 59 removes Section 11 and Schedule 3 from the 2009 Act, and also removes the provisions which Schedule 3 inserted into the Jobseekers Act 1995 and the Welfare Reform Act 2007. We know that the vast majority of people with substance dependency issues eventually want to break free of their addiction. The National Treatment Agency reports that, last year, more than 200,000 people in England entered treatment. That represents about two-thirds of all those with dependency issues. In 2010-11, 27,969 adults left treatment in England free of dependency, which is an increase of 150 per cent compared with 2005-06. Waiting times continue to reduce-96 per cent get into treatment within three weeks of referral. In England, we spend more than £400 million on drug treatment and this budget has not been cut. We want to build on that. We believe that the right approach is to offer support and encouragement for those who want to tackle their substance addiction. We are therefore ensuring that our advisers have the confidence to engage in the often difficult conversations with those who they believe have dependency problems, that they understand the issues that addicts face and that they work in partnership with local treatment agencies to improve referral rates. By encouraging closer working between Jobcentre advisers and treatment service providers we will increase the number of people moving into sustained recovery.

If claimants decide to take up the treatment opportunities available to them, we will look to ensure that they have the opportunity to focus on that treatment and make it succeed. This is not being soft on addicts. The choice to tackle addiction is not an easy one, as anyone who has tried will confirm. Claimants who decline the offer of treatment will be expected to comply with their ordinary full labour-market conditions as a requirement for continuing to be entitled to their benefit.

The noble Lord, Lord McKenzie, asked about universal credit. We are clear that the imposition of work-related requirements under universal credit must not conflict with an individual's treatment regime. We want to maximise every individual's chances of an early move into work. For those with substance dependency, the first logical step will often to be to confront their addition, and we do not want simultaneously to impose labour market requirements that make it challenging or even impossible to complete treatment. This will be our guiding principle under universal credit and we will make sure that this can be achieved. The structure of universal credit legislation makes this relatively straightforward. We have considerable flexibility in the powers we are taking in the Bill to ensure that we can tailor work-related requirements to fit with the circumstances and capability of an individual. We will be considering how best this can be done as we develop regulations.

The provisions inserted by the Welfare Reform Act 2009 are inappropriate and likely to have unintended adverse consequences for substance or alcohol-dependent claimants, their communities and the public purse. The provisions have not been commenced and do not reflect this Government's direction of travel in dealing with the very difficult question of drug and alcohol addiction, nor do they take account of the introduction

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of universal credit, which will replace both the income-related strands of JSA and ESA in due course. Hence we seek to repeal them. I beg to move that Clause 59 stand part of the Bill.

Lord McKenzie of Luton: I am grateful to the Minister. I should say that the purpose of raising this issue was not to mourn the passing of Schedule 3 but to understand where the Government were heading in its place. Perhaps the noble Lord dealt with it by saying that this can be accomplished by regulations, but the strategy says that those who are undertaking residential treatment would be deemed as not having been in the work-related activity group or its equivalent in universal credit. Would he say that the Bill provides the necessary flexibility to achieve that or is something else expected to deal with that?

Perhaps the Minister could also say something about the protections, which was one of the important features of the 2009 Act, that if somebody declares that they have a drug dependency-effectively owning up to something that could be a criminal offence-what safeguards does the noble Lord have in the current arrangements that would provide protections for individuals in those circumstances, assuming that the noble Lord believes that those protections should be there?

Lord Freud: To take the first question, we already have amended the regulations. We did that from 28 March 2011, amending the regulations relating to employment and support allowance. It is clear that those in residential rehabilitation for alcohol or drugs should be automatically treated as having limited capability for work while they are in residential rehabilitation, and this will help them have access to benefit at a time when they are focusing on their treatment.

On the matter of the protections, I am going to have to offer to write to the noble Lord. That is a pretty complicated matter. When we are not doing the things for which the protections were incorporated, it is difficult to understand where we might need some protections. I will have a think about that and write to the noble Lord.

Lord McKenzie of Luton: I am grateful to the Minister for that and I think that this deals satisfactorily with the purpose of the probe.

Clause 59 agreed.

Clauses 60 to 63 agreed.

3.30 pm

Clause 64 : Persons under 18

Amendment 76C

Moved by Lord Freud

76C: Clause 64, page 51, line 16, leave out "figure of £145.80" and insert "monetary amount specified"

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Lord Freud: My Lords, this is purely a minor technical amendment to remove references to specific maximum amounts of weekly benefit payable for successive accidents and prescribed diseases for persons under the age of 18. The present amounts specified as subject to uprating have changed since the Bill was introduced. The figures currently specified in Clause 64 were correct on the Bill's introduction but have since been amended by the uprating order-and it is likely that they will change again before the provision comes into force. I beg to move.

Baroness Hayter of Kentish Town: My Lords, I thank the Minister for introducing the amendment, which will remove the significance of the age of 18 in industrial injuries benefits legislation. It will mean that all existing and new claims by persons under 18 will be paid at normal industrial injuries disability benefit rates. That is a very welcome move. I have no problem with the government amendment permitting the maximum amount to be specified in regulations rather than in the Bill. However, I will pose a couple of questions.

First, will the Minister put on record that the Government are not intending to reduce the maximum amount payable under this provision? Secondly, will he say whether, assuming the amounts will be in regulations, the regulations will be subject to the affirmative resolution procedure? Young workers who have suffered industrial injury may constitute a small group, but they are vulnerable and it would be useful to know whether the House will have an opportunity to debate the matter.

Thirdly, will the Minister let the Committee know whether payments made under the scheme will count as benefits under the proposed benefit cap? Our understanding is that they will be so included. Obviously, we will debate the benefit cap when we get to Clause 93. However, it seems that to include these payments, which are compensation for injuries at work, within a calculation of the total support that a family could receive from the state, would be somewhat unfair. It would mean that for a young person living with their family, any such support would be taken away from the total family entitlement, which would effectively turn the benefit into a means-tested benefit.

Lord Freud: My Lords, I will pick up on those points. I am grateful that the noble Baroness said that she welcomed the amendment. Clearly, the main thrust of it is to simplify. In this case she will have been delighted to see that we levelled up rather than anything else. It is always nice to be able to give money away occasionally. I confirm that we are not intending to reduce the maximum amount, which will be specified in the uprating order. We are working on the precise treatment of different elements-I apologise for the technical terms-and looking at the interplay between different benefits. We will treat some as the equivalent of earnings, some as the equivalent of benefit, which will knock out the right to universal credit, and some benefits will be disallowed. Clearly,that will be specified in the regulations. We can discuss that entire area when we look at the whole range of benefits. The principle is that generally, where something is the

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equivalent of state support, one does not want to double up state support. Sorry, I should clarify. When I said that it is in the uprating order, that is subject to affirmative procedure, so it will be affirmative.

Amendment 76C agreed.

Amendment 76D

Moved by Lord Freud

76D: Clause 64, page 51, line 17, leave out "figure of £89.35" and insert "monetary amount specified"

Amendment 76D agreed.

Clause 64, as amended, agreed.

Clauses 65 to 67 agreed.

Clause 68: Housing benefit: determination of appropriate maximum

Amendment 77 not moved.

Amendment 78

Moved by Lord Freud

78: Clause 68, page 52, line 36, at end insert-

"( ) In section 176(1) of that Act (Parliamentary control), after paragraph (aa) there is inserted-

"(ab) the first regulations made by virtue of section 130A(5) or (6);"."

Amendment 78 agreed.

Amendments 79 to 86ZZZA not moved.

Clause 68, as amended, agreed.

Clause 69 : Ending of discretionary payments

Amendment 86ZZZB

Moved by Baroness Lister of Burtersett

86ZZZB: Clause 69, page 53, line 20, at end insert "providing these amounts are ring-fenced for the purpose set out in the Act"

Baroness Lister of Burtersett: My Lords, noble Lords of a certain age and with long memories-particularly the noble Lord, Lord Newton of Braintree, who unfortunately cannot be in his place this afternoon, but who has very kindly said that I can tell the Committee that he is in sympathy with what I am about to say-will appreciate the irony of me rising to defend the Social Fund.

Back in the mid-1980s, when I was at the Child Poverty Action Group, I was trying to convince your Lordships' House to reject the introduction of the discretionary Social Fund in place of single payments made as a right to help people with one-off needs they were unable to meet out of their weekly benefit. Although I am defending the Social Fund today, I am not claiming that it does not need reform. Clearly there is a consensus that there are problems. However, nothing the Government have said has convinced me and many of those closer to the ground than I am that Clause 69 is the solution to those problems.

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The clause abolishes discretionary community care grants and crisis loans. In their place, local authorities in England will have the power, but not the duty, to provide assistance using money transferred from the DWP without ring-fencing. The devolved Administrations in Scotland and Wales will decide their own arrangements. I will focus my remarks on England, but I hope that other noble Lords will be able to provide a perspective for the other nations. The noble Lord, Lord Wigley, has apologised as unfortunately he has had to return to Wales this afternoon.

The Social Fund provides vital cash assistance. It is, in effect, the ultimate safety net. CCGs are intended to help vulnerable adults establish themselves or remain in the community. As well as their emphasis on helping people live independently in the community, they are also available to people on benefit who face exceptional pressure, such as family breakdown and long-term illness. Interest-free crisis loans are normally payable when an applicant can show that they are the only way to avoid serious damage or risk to health and safety, although the qualifying conditions have been tightened up recently. According to research by Crisis, 94 per cent of housing advisers working in private rented sector access schemes which help vulnerable people into private accommodation say that crisis loans and CCGs are vital or important to their work.

Local authorities are not being asked to administer a locally provided social fund. The discretionary Social Fund is being abolished. There will be no requirement on local authorities to provide cash assistance or, indeed, any assistance. All the signs are that most local authorities will provide any help in kind, rather than in cash. This has raised fears of stigmatisation, lack of choice and the undermining of financial independence. Moreover, the Parliamentary Under-Secretary of State, Maria Miller, told the Public Bill Committee in the other place that the new service may not necessarily be an application-based service.

If I were writing the Minister's brief, I would cite the recent Communities and Local Government Committee report, Localisation issues in welfare reform, which supports the proposal to devolve responsibility for the discretionary Social Fund, so I will get in first and point out that the report also acknowledges that there is legitimate debate about whether localisation will in itself be an adequate remedy for the long-standing problems of the Social Fund. It expresses some reservations to which I will return in relation to the amendments before us.

Having read the oral evidence and some of the written evidence to the CLG Committee, it does not seem to me that the main conclusions of the report reflect the balance of that evidence, and I have to say that I place more store on the views of, for example, Citizens Advice and the Social Fund Commissioner than those of the committee itself. The commissioner warns that:

"With over 150 local authorities in England, there is a high risk that a scheme providing unbounded discretion in each of those areas could result in geographical inequities that do not correlate with local needs ... in the absence of any guidelines or criteria that set parameters for local discretion, it will be difficult to achieve some broad consistency of purpose and approach".

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In other words, localisation could aggravate rather than address one of the Social Fund's current problems. The commissioner concluded that:

"There must continue to be a safety net for poor and vulnerable people because their needs will not disappear".

As I will argue in a moment, without a ring-fenced budget, there can be no assurance that there will continue to be any sort of safety net.

Alan Barton, the social policy officer for Citizens Advice, in his oral evidence disputed the DWP's characterisation of CCGs as delivering a social care package. He explained that:

"To a large extent, we are talking about items with which people furnish their properties".

Many of those needing such items will not be in touch with local authorities. An analysis of 500 applications to the discretionary Social Fund by the Social Fund Commissioner found that:

"A significant number of vulnerable people trying to create or re-establish or remain in a secure home, who have 'slipped through the net' and receive no support",

from other support services. With regard to crisis loans, Mr Barton acknowledged that,

but added that,

That is the view of Citizens Advice.

Growing numbers are already turning to food banks. As Shelter argues, food banks should be seen as a last resort and,

Family Action, which together with a wide range of charities is supporting these amendments, warns that charities such as it will not be able to cope. It fears that in the worst case scenario, there will be greater resort to loan sharks-a fear that I have already expressed with regard to the move to monthly payments.

One of the main arguments put forward to justify this change is that local authorities are better placed to provide this kind of help. In his oral evidence to the Public Bill Committee, the Secretary of State painted a picture of a,

That is contrasted with the remote decision-making under the present scheme. However, there is no guarantee that a transfer to local authorities will necessarily mean localised face-to-face decision making. Some authorities might choose to contract out any service, and there is nothing to stop them processing claims remotely or by phone. I am advised by Family Action that Westminster council recently announced that its

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emergency response team, covering social services activity involving children's and adult social services, emergency repairs, homelessness and emergency lifeline calls will be moving to Dingwall in Scotland. As Family Action observed, it is unclear how staff based 850 miles away could be expected to deliver a more local service. This clause is about the abolition of the discretionary Social Fund, not its better targeting, as has been claimed. I believe that the case for localisation has not been made convincingly, and on this basis, I oppose that the clause stand part of the Bill.

3.45 pm

The arguments I have put so far also support Amendments 86ZZZB to 86ZZZF, to which I now turn. The most important of these is Amendment 86ZZZB, which requires ring-fencing of the money devolved to local authorities in lieu of the Social Fund, for without it we have no way of ensuring that this money will be spent on meeting the needs that CCGs and crisis loans would previously have met.

If I express scepticism that local authorities will carefully set aside this money for the purposes for which it was intended, that is not intended as a criticism of local authorities. However, let us be realistic: local authorities are under tremendous pressure at present to meet even their statutory duties, as funding is cut back. Sir Richard Tilt, the then chair of SSAC and a former Social Fund commissioner-a highly respected one-told the Public Bill Committee that it did not seem,

would provide the kind of "final safety net", provided by the Social Fund,

He observed that, in his experience, local authority "provision is patchy".

The precedent created by the removal of ring-fencing from supporting people funds, also designed to help vulnerable groups, does not inspire optimism. Research by Homeless Link indicates that two in five local authorities are making disproportionate cuts in this budget, relative to the settlement received, while, according to Crisis, authorities are in practice cutting 13 per cent on average, although the overall cut in the supporting people budget is only 2.7 per cent. The amount allocated to each local authority is likely to be pretty small. Sir Richard Tilt expressed particular concern about the implications for CCGs, telling the Public Bill Committee in the other place:

"By the time you ... have dished that out to 100 plus local authorities, there will not be a great amount of money at local level, and I think, as it is not ring-fenced, it is likely to disappear into other things".

His concerns were echoed by Professor Elaine Kempson, a member of SSAC, who argued that without ring-fencing,

In her view, ring-fencing,

-a view reflected in many responses to the DWP's call for evidence. I acknowledge that the CLG Committee

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did not endorse this position because it believed that it is desirable that local authorities have autonomy to use the resource in innovative ways. However, ring-fencing a resource does not deprive a local authority of such autonomy; it simply prevents it using it for some other purpose entirely. I hope therefore that the Minister will be willing to give serious consideration to this amendment in order to preserve a vital safety net.

Amendment 86ZZZC addresses the fears voiced by voluntary organisations such as Family Action, Women's Aid and Platform 51 that local authorities might impose a local or residence condition as a way of rationing assistance. Local authorities can apply such a condition when allocating social housing, other than when they are prohibited from doing so by law in the case of priority need groups. In the Public Bill Committee, Karen Buck MP raised this issue, citing an earlier exchange with the Secretary of State, whom she had asked:

"And we can protect against local authorities saying that this is not their duty with particular individuals?".

He replied, "It is their duty". When she then asked,

"Whose duty would it be?",

he responded:

"It is a moral duty".-[Official Report, Commons, Welfare Reform Bill Committee, 24/3/11; col. 164]

A moral duty is fine, but I doubt whether quoting the Secretary of State to that effect would cut much ice with a local authority. If the Government believe that there is a moral duty, they should make it a statutory duty. The amendment reflects in particular fears that a local connection rule could be used against groups such as homeless people, ex-prisoners or women fleeing domestic violence.

Amendment 86ZZZD reinforces a previous amendment by ensuring that provision will be made for those fleeing domestic violence. Women's Aid surveys of residents suggest that significant numbers of domestic violence survivors set up new homes following their stay in a refuge. Many rely on the Social Fund to provide basic furniture, beds, cookers and white goods. In the view of Women's Aid, the fund provides a lifeline for these families. Moreover, it warns that in its experience, failure to obtain financial support with help to move and furnish new homes may be one factor leading women to return to their violent partners, and the fear that they will be unable to obtain such financial help may prevent women leaving their violent partners. What kind of choice does that leave women? Either they risk exposing their children to significant deprivation or they continue to face the prospect of domestic violence.

Maria Miller assured the Public Bill Committee that the Government would take,

As well as referring to budgeting loans, she said that she imagined that women fleeing domestic violence would be a high priority for local authorities. However, that does not constitute the Government taking "extreme care". The amendment would enable them to make good on their commitment and thereby underpin their domestic violence strategy.

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Amendment 86ZZZE is essentially an attempt to write into the Bill a degree of accountability once the discretionary Social Fund has been localised. Public money is being devolved with no strings attached to local authorities to provide the ultimate safety net for some of the poorest and most vulnerable people in their areas, yet there is no plan for post-implementation review on the grounds that policy responsibility for local welfare assistance will sit with the Scottish and Welsh Governments and local authorities in England. This strikes me as central government washing its hands of all responsibility for this important area of social policy. As far as I can see, there is not even a commitment to a good practice guide such as that issued for discretionary housing payments.

In response to concerns voiced about this, the Government argued that it will be sufficient to set out the purpose of the funding in a settlement letter, although they now say that this may be supplemented by a requirement to report on how the funding has been used, and that this will be discussed with local authorities and others. This is progress of a sort, although as the CLG Committee observes, it falls some way short of the accountability mechanisms suggested by some stakeholders. The Minister, Steve Webb, told the CLG Committee that the Government sees accountability as being local. He said that,

The committee interpreted that as the Government relying principally on,

Surely the idea that voters will hold local authorities accountable through the ballot box is fanciful. The people who are most likely to need this assistance are the same people who are least likely to vote. I simply do not see this being an issue in local elections for the rest of the electorate. Nor should it be up to local organisations to prise the information out of local authorities.

The CLG Committee recommended that central government identify clearly the amounts that are allocated to local authorities and collect information about their use until the new arrangements are bedded in. It suggested a period of five years. Amendment 86ZZZE goes rather further than this by seeking a review of the impact on those who previously would have been eligible for help. I suggest that we need to monitor both the use of the moneys and the impact of the localisation of this help. Even if the Minister does not accept that this should be written into the legislation- I quite see why he might not-I hope that he might be able to make a commitment to the Committee on this matter.

Finally, Amendment 86ZZZF seeks to postpone the abolition of the discretionary Social Fund until the migration to universal credit is complete and specified performance targets have been achieved. Despite the immense care clearly being put into the issue of delivery, we cannot be sure that things will not go wrong during the transition to what the Government described as the most fundamental reform of social security for

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60 years. Would it not be prudent to maintain the ultimate safety net provided by the Social Fund until the Government are satisfied that universal credit is working well? There is a real danger that the absence of the ultimate safety net could impact negatively on universal credit itself during its implementation phase in a period when unemployment is still likely to be high and living standards remain under serious pressure.

My preference would be that Clause 69 does not stand part of the Bill. So long as it does, I believe that amendments such as these and the amendment in the name of my noble friends are vital to ensure that the needs of some of the most vulnerable members of our society continue to be met. I beg to move.

Lord Kirkwood of Kirkhope: My Lords, it is a pleasure to follow my colleague, who, like me, at the time, was fulminating against the introduction of the Social Fund as a wicked Tory trick. I remember the debates very well. I was standing shoulder to shoulder with her at the time. In view of the experience since 1986, the Social Fund migrated into a place that met the need much better than I expected. There is a little vignette here which I hope I can convince the Minister to go away and think a little more about because the Social Fund replaced single payments. Single payments were a rock-solid, embedded system in the social security system and it was fully appealable, all the way through to the Social Security Appeal Tribunal and, indeed, to commissioners in 1986. One of the reasons why the noble Baroness and I were so aghast at the proposal was that the initial 1986 White Paper suggested that there should be no appeal of any kind on the grounds that these were discretionary payments, so how could you have rules for them?

That was all fine until the Council of Tribunals-these are big legal cheeses-produced a report and, for the purposes of the further elucidation of the Committee, I have obtained a copy of it. It is a special report of the Council of Tribunals when, in 1986, it waded into the argument. I shall quote two sentences about the importance of independent review of any social security decisions. The council was responding to the White Paper and said that,

in 1986. It continued:

That was an interesting intervention at the time. What did the Government of the day do? They took it back and thought about it carefully and a man called Mr Tony Newton, who was the Minister of State, had second thoughts and went away and produced amendments, which the Commons accepted. They were then sent back to the Lords and the Lords capped the sensible amendments that had been introduced by the then Mr Tony Newton by introducing the Social Fund Commissioner. The Office of the Social Fund Commissioner was set up at that stage and has

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been extremely successful, much more successful than some of us thought at the time. It filled a need, and that need is greater now than it was then. My point about the vignette is that it is possible for Ministers of State to listen to what has been said to them about the need for independent scrutiny and review, to go away and reflect and to come back with some better ideas.

I cannot resist this Tony Newton quote. After a good deal of prodding in the ribs by many of us, he said that there should be,

he was in the Commons at the time-

He did the business and it was sorted. It was the House of Lords that put the final touches to it in a way that made the system work. That is a lesson that we should bear in mind this afternoon. The noble Baroness has set the scene very well, and I concur with everything she said, which is why I have put my name to these amendments.

4 pm

I think it would help the Committee's consideration if we turned to look at the money side of this because there is still a little uncertainty about the sums involved and the transitional arrangements. I have been looking at some the National Audit Office's consideration of the DEL and AME prospects for the department. I remind the Committee-and it is quite a sobering thought-that the department has set a target to reduce running costs by £2.7 billion over the comprehensive spending review between now and 2014 and to reduce annual managed expenditure by £17 billion in pensions and benefits. That is a huge change. I do not need to tell the Minister that because he is trying to do all these things and we are trying to support him to do most of them. To be fair, the department has made savings-I think that is acknowledged by the NAO-of £535 million in running costs in 2010-11.

However, we as a coalition Government could be accused of doing this for financial reasons because the job is too hard to do, the administration is not easy and therefore if we have to make these savings of £2.7 billion, some of the administrative costs and some of the running costs of the expenditure on the benefit could be saved-the noble Baroness adverted to this in passing. What is our answer to that? I hope that we are able to say that this is not being done for financial reasons because you do not need to be an economist to work out that although the needs that the United Kingdom may be facing may be less dire than those facing some of our European sister nations, there is going to be a period of real difficulty. The last thing that any sensible Government should be doing is thinking of making changes merely to save money, if I can put it that way. The head of the National Audit Office said recently:

"The Departments' big challenge is to cut costs by £20 billion"-

that is DEL and AME-

That is the National Audit Office warning us that this is a very good trick if we can do it. I want some reassurances about the fact that we are not doing this to save money.

Subsidiary to that, I would like to hear a little bit more about the fact that we know that the Social Fund is administered through 23 Jobcentre Plus offices, and that is the part of the department that will be suffering the most acute administrative savings, I fear. I was looking at the evidence that the Permanent Secretary gave to the Public Accounts Committee. They are even now beginning to shift the spend across those 23 areas to try to mirror the local government areas that they will eventually have to match up to if these proposed changes go through by 2013. Can we learn a little more about that? I am very worried. The incoming requirement is that they establish needs in the areas that are being responded to on a quarterly basis so that the change is not too abrupt, and I can understand that there may be some sense in doing that. Am I right in thinking that there is a transitional phased spend programme based on legacy spending?

My concern is that if it is merely legacy spending, how can we be sure that it will face up to future requirements because they may dramatically change in the economic circumstances we are facing and they will certainly change regionally? There will be differences over the next two, three or five years in some of these spend levels so, if we are not careful, we will be sending money, such as it is, to a system we are not sure about in circumstances that we do not have any control over thereafter. I would like some reassurance about some of these transition arrangements. It is a significant sum of money, about £178 million at the last count, and covering all the discretionary elements of the Social Fund. That is a huge amount of money, and it is a lifeline. It stabilises people's lives in a way that no other part of the social security system does.

I will turn now to the evidence for this policy. I suggest that if they like doing these things at the weekend, colleagues should compare and contrast the DWP response to the consultation that was recently mounted with the excellent principles set out by Mr Karamjit Singh CBE, the Social Fund Commissioner. He is an excellent man-I have worked with him a lot in the past-and he has done an excellent job. The department and Parliament owe him a debt for the work that he has done in administering the Social Fund and the Independent Review Service with such aplomb. He very helpfully set out on a single sheet of A4 paper the principles underpinning what he thinks the new arrangements should include.

The first point is a clear vision about who you are trying to help, which is absent from the DWP consultation response. He also refers to openness about the type of help available. I do not think that anybody knows what type of help will be available, according to the DWP consultation. When it comes to funding for both programme and delivery costs, we have no way of knowing whether that is going to be delivered in practice. As for "consistency of approach", we will have 400 local authorities and two independent nations

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doing different things, so the DWP consultation fails on that test. A central overview, which he also mentions, is pretty difficult to achieve under the new system. The principles include:

"High quality responses that are timely, fact based and deliver a reasonable decision in relation to the individual circumstances".

We have absolutely no guarantee that that will be delivered either.

Finally, and importantly, is:

"Access to an independent grievance process".

The Commissioner is very robust, and you would imagine that he would say this. It is not just sour grapes because his process is being wound down. He takes a very clear view about access to independent grievance processes to ensure that decisions are fair and are seen to be fair. This takes only three sheets of paper in total, but it tells the story rather well. We need to reflect on that carefully.

I know that the Government, when they made these decisions in 2010, were under a colossal amount of pressure, and I appreciate that, as I appreciate the need for deficit reduction. However, the evidence is there. The Social Fund Commissioner is of course available and responsible for promoting research and improvements to the Social Fund, and from time to time they involve the experiences of customers. The last one he did was in July 2010. There was a desktop survey of 500 applications to the Social Fund at random, looking at grant payments and crisis loans. It is instructive to look at the kind of people who are helped by this. There is a summary of key statistical findings-I will quote only one or two.

The caricature of people who apply for Social Fund crisis loans are people who are gaming the system. They are using it as an ATM system to collect money for their weekend jaunts. When you look at the results of this survey, it is actually quite heartbreaking. I was surprised, for example, to find that of the 500 cases examined at the IRS, 58.5 per cent were made up by people of middle working age, between 25 and 49. That is not part of the caricature. The survey shows that 27 per cent,

while 1.8 per cent,

The survey showed that 72 of the cases-14 per cent-were made by women aged between 16 and 24, many of them with children, and many with illness in the family,

I could go on, but the last one, which I have chosen at random, is that 32.9 per cent of the 500 sampled were already,

So that is an established position from which they start.

I cannot resist another one. The average amount requested by customers was £1,596.55. The significance of that payment level is what it saves in terms of access to adult emergency services, social work departments and provision for homelessness and all the other consequences that flow from emergency situations not being responded to expeditiously and properly. It is a

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cash injection to stabilise people's lives at a time when they need it most. We will need more of that kind of facility in future. If the Government were thinking of changing the system, they should have gone through the existing work of the IRS and the Social Fund Commissioner more carefully before suggesting that things should be devolved and left to local government.

There are two things that I find very difficult to support in what the Government are doing-and I mean that. The first, as I said, is the absence of an independent review service. After all the fights we had in the past to maintain it, giving it away as casually and easily as this will be very difficult for me. However, more important than that is ring-fencing. I cannot see any circumstances in which I could support ring-fencing to local authorities in the way that it is planned at the moment. I would have no confidence that it would be deployed for the purposes that it was originally voted for by Parliament.

In addition to that, I have no confidence that it will be used in jurisdictions like Scotland-and my noble friend Lord German may say a word about Wales. Although the money may flow to the Jobcentre Plus call centre in Scotland, it will be controlled by the Scottish Government. I do not think that we as a House can be sure of having any influence on that. If it is only backed up by a letter of information, setting out the aspirations of the Westminster Government, that will be nothing like a sound enough basis on which to deal with just short of £200 million of absolutely crucial social security spending.

I am willing to make concessions on all the other bits of this, but as things stand I am not prepared to concede on the independent review or ring-fencing. I do not say that to make my noble friend's life any more difficult, because it is not easy as it is. However, the noble Baroness, Lady Lister, and I were around in 1986. We drew lines in the sand then and, although it might affect my career prospects in future, I will continue to draw that line in the sand now.

4.15 pm

Baroness Hollis of Heigham: My Lords, there has always been a tension within social security, as David Donnison spelled out many years ago when we had what was then called supplementary benefit, between standard, national, no-postcode-lottery funding and payments, and the need for discretion. The Social Fund as it has become has that element of discretion and flexibility, which is why it would be madness to go to a call centre and think that you can do the thing that most requires discretion by telephone. I entirely sympathise with the Government's wish to move away from that procedure.

My noble friend Lady Lister and the noble Lord, Lord Kirkwood, have eloquently explained the need for the Social Fund. I do not want to rehearse that, although if I had my way I would treble the money going into it because of its value to people. Indeed, the people who need it are not there because of financial mismanagement, let alone scrounging. They are there for the most part because of absolute, desperate, grinding poverty, having come out of care, prison or a refuge. They are the ones we seek to help.

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Instead, I want to talk about something more mundane: the process proposed for the handling of Social Fund moneys, particularly community care grants, in future. Where that money is going to a local authority that is a single-tier unitary authority, I have no reason to think that it will not be able to get its act together because housing, social services and advice services are integrated on one level. However, it will be catastrophic for the shire counties where there are two-tier structures. I shall explain.

I come from Norfolk, a county which is about 60 miles by about 40 miles. When I was a county councillor representing Norwich I was closing schools that I had never visited and putting yellow lines on roads I did not drive on, and we called it "local government". I have to say that the Jobcentre in my district had more local knowledge than most county councillors had outside their immediate patch. Under this proposal the money will go to a county council that has no local experience or knowledge. I do not in any way mean to criticise social workers who are doing a heroic job, but the council has none of the local knowledge at councillor or policy-shaping level that is required.

A second problem is that in a county council like Norfolk, there are a number of rural districts within which there may be small pockets of acute rural deprivation-even though they may contain thatched cottages covered with roses-but there is also the deprivation of Great Yarmouth, King's Lynn, Thetford and some of the poorest estates in the eastern region, in Norwich. If the county council decides to go on a format allocation, it may send money to rural districts that do not need it as their pockets of rural deprivation have been resolved because those people have voted with their feet-I know this to be the case-and have come into the nearest urban city area. I have known good social workers give them the bus fare to do so, and quite right too; I would do the same in their situation. So the first problem with sending the money over to the county council is that they do not have local knowledge, but the second problem is that there is a huge variety of circumstance in an area as large as Norfolk, and I have no confidence that that will be recognised in the use of that money by the county council.

The third issue is what we call ring-fencing. If I were a county councillor with this money and I was seriously worried, as most county councillors are in good faith and decency, about child abuse protection, I would regard this as a fund to plunder. I would regard other priorities as being of more urgent need. I am therefore not in any sense confident that that money will be spent where it should be.

For several reasons, I want to see instead, and I hope that this will happen, the money in two-tier authorities going to the local district council. First, the local district council should have much more intimate knowledge of its locality and local needs. If localism means anything, it does not mean distributing down to a county council, half of whose councillors have never visited the village or the area where the deprivation is concentrated. You might just as well have the money coming from London or indeed from Scotland. It has to go down to the local district council.

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Secondly, over and beyond local knowledge, if we cannot have ring-fencing-I hope we do, but I will come back to that-then at least it should be integrated with the fact that it is those same lower-tier authorities, the housing authorities, that are going to be responsible for the discretionary housing allowance and for the development of this absurd structure of individualised council tax benefits. Okay, it is an absurd and foolish system but it looks as though we may be stuck with it for a while until better sense prevails and we can reintegrate council tax benefit into universal credit. This means, though, that district councils on the ground have to have the staff, the resources, the local knowledge and the detailed experience of those same client groups for discretionary housing awards and for council tax benefit. They should ally to that the grants and some of the loans of the Social Fund because often they are dealing with the same client group, and often for the same purpose.

We have heard that a high proportion of community grants are spent in securing rent access to the private rented sector. It means that discretionary housing allowance-two funds, in future on two tiers-will be doing the same thing for a local community. This is absurd. If we cannot have a ring-fenced fund, then at least the money should go to a district council which can see the best way of meeting the needs of young people coming out of care or of ex-offenders. It may be that more money should go into discretionary housing and less should go elsewhere, but you can meet the service in different ways. However, I agree with the noble Lord, Lord Kirkwood, that you then need to make sure that there is an effective reporting and monitoring regime so that local authorities at the district level are accountable for how they have spent the money. There is more than one way to meet a need, and that is why I am not always supportive of ring-fencing. Local authorities can often meet a need in a better and more effective way-you only have to see the difference between residential care and domiciliary services to realise that there is not just one way-but they have to have retrospective, so to speak, supervision and control by virtue of inspection and monitoring.

I am hoping that the Minister will respond positively to this and say that when dealing with two-tier authorities, the shire counties, where the document says that the money is going to the upper tier, he will give a commitment, as far as he can, that there will be a letter of guidance requiring county councils to distribute and allocate funds based on previous expenditure levels in the district council. Otherwise some rural districts may pocket the money to keep their council tax down while the urban areas that receive people from the rural districts who have voted with their feet will have an even heavier burden to bear on reduced funding. In addition, meeting need should be recognised as a part of a district council's repertoire. If there is to be an assumption that a local connection should be required, I accept the need for special care, particularly for battered women. Actually, in practice that is the least of our problems because in my experience nearly all local authorities have a very decent arrangement of trading homes so that women coming out of a violent relationship can move on from a hostel to a half-way house and then into a permanent home in a different

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authority. That works pretty well on the ground, but there are many other groups that, if they can, rural authorities will encourage into urban areas so that their responsibilities are negated. I hope that in that case the money will follow the client. If it does, I have no problem with that at all.

When the Minister deals with the big policy issues raised by my noble friend and by the noble Lord, Lord Kirkwood, I ask him also to comment on the process point and at least give some of us some comfort that this will simply not be exploited, manipulated and abused in good faith by upper-tier authorities to do things that, because of their lack of local knowledge, they regard as more important than this and, as a result, strengthen the capacity of lower-tier authorities which are going to be dealing with discretionary housing allowance and council tax benefit. They will have an additional resource in order to meet the local need that they are best placed to address.

The Earl of Listowel: My Lords, I rise briefly to support the call by the noble Baroness, Lady Lister, and the noble Lord, Lord Kirkwood, to introduce ring-fencing or at least to allow ring-fencing for some time while we go through this huge transition with the introduction of this Bill. I do so for a number of reasons. Listening to the debate I am again reminded of the speech made by the right honourable Iain Duncan Smith at the Conservative Party Conference this year. He highlighted the great amount of debt that this country carries and, in particular, the debt of unsecured loans that people have taken upon themselves. Will the Minister say whether he is concerned that individuals who currently benefit from the Social Fund might turn to loan sharks or take out unsecured loans and expose themselves and their families to risk and threat because there is nowhere else where they can get the support they need?

I have been meeting chief executives, and indeed I recently met a deputy chief executive of a metropolitan authority. After spending the evening with him, what really struck me was the immense burden that he carried. He had to make choices with limited resources. I asked him whether he found himself having to cut back in the areas of child protection and child and family social workers. He said that he and his colleagues were definitely not taking money out of those pots. Then, on meeting a group of chief executives and directors of children's services in the Palace of Westminster to discuss children's centres, again we heard that the money was definitely not being taken out of children's centres and they were really trying to support those as far as possible.

My point is that there are so many calls on the limited resources of chief executives and directors of children's services in local authorities. The risk is that this money, as the noble Baroness, Lady Hollis, has said, will be diverted into other very important provision, but that those families who need this ultimate safety net will lose out under the new arrangements. I look for an assurance from the Minister that this will not be the case. I should say that Barnardo's, which has so much experience in this area has raised these concerns with me. One should also pay tribute to the Conservative Administration that set this up in the first place and

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the noble Lord, Lord Newton of Braintree, because from what I have heard, it has made a very positive impact on the lives of some of our most vulnerable citizens and families.

The issue of accountability, of how this money is spent, has been aired and needs to be addressed. Should there be minimum standards that local authorities have to meet before they are allowed to use this money as they see fit? I look forward to the Minister's response.

Baroness Turner of Camden: I have very little to add to what has been said by a number of speakers this afternoon because they have covered the ground extensively. I was particularly interested in Amendment 86ZZZD because it refers to,

We shall shortly be considering domestic violence in another context, that of legal aid, which has some reference to domestic violence. The important thing about this in the local government context is that domestic violence frequently takes place within a family environment. Therefore, the individual against whom it is practised has to find some way of getting out. I am interested that this amendment refers to "applicants fleeing domestic violence". Very often these women and girls simply have nowhere to go. Therefore, this amendment places a responsibility on local authorities, if money is made available, to provide the necessary financial support for people fleeing domestic violence.

That is very important in the current situation. I have recently attended other meetings in that connection. It appears that probably about one in four women has suffered from domestic violence at one time or another. Very often, of course, it is practised in families against very young people, very young girls. It is very important that there should be some authority and resources given to enable this to be dealt with. It is dealt with quite adequately in this amendment and I shall be interested to hear what the Minister has to say about it.

Lord Brooke of Sutton Mandeville: My Lords, this is an unexpected, generic intervention. Although the Committee seems to be making real progress, I reassure my noble friend the Whip that I shall be brief. It relates to a period even earlier than 1986 and to a different and extreme subject, but there is a moral to what I am going to say, to which I gather Her Majesty's Government in the Commons is responsive.

Twenty-eight years ago I became the Parliamentary Under-Secretary for Higher Education. I inherited quite considerable cuts to the higher education budget and I decided that my time as Parliamentary Under-Secretary was going to be spent going round the country, available to any higher education institution that chose to invite me, and I would be St Sebastian responding to their observations about the cuts. I had two and a half years of pure joy because they made it extremely attractive to me to come and gave me a marvellous experience of seeing what they were up to. The experience of St Sebastian was cheap at the price.

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4.30 pm

I refer in particular to Liverpool Polytechnic, which had a distinguished record in terms of architecture. I can see the look on the face of my noble friend the Minister, who is wondering where I am going, but I shall continue to go there. The Department of Education and Science had provided significant sums to Liverpool Polytechnic in order to enhance the admirable things it was doing, but Mr Hatton and his colleagues took the entire sum that we had provided for Liverpool Polytechnic and put it into the housing funds account. A year later I visited Liverpool Polytechnic again, but Mr Hatton's colleagues were unwilling to have lunch with me, although they were extremely keen that I should meet them, which I agreed to do. Outside the premises of our rendezvous, a man was distributing the Socialist Workers Party newspaper, and, as he did not seem to be doing brisk trade, I accepted a copy from him. I went into the meeting with it under my arm, in a spirit of benevolence, similar to that of Rab Butler during the passage of the 1944 Education Bill when he was visited by the Archbishop of Canterbury and other bishops, whom he disarmed by saying, as they came into the room, "I wonder, Archbishop, if before we get down to business you would lead us in prayer".

The exposition by Councillor Hatton's colleagues to me was absolutely barefaced. They said that they had been extremely grateful to my department, which had nothing to do with housing, for the money that we had provided the previous year to Liverpool Polytechnic and which they had transferred to the housing account. The purpose of the meeting was to ensure that, if possible, I would do the same thing again. I had to explain to them that they had made it rather less attractive for us to provide money to Liverpool Polytechnic than it had been in the past.

Ring-fencing can create problems. We wanted to help Liverpool Polytechnic but we were effectively denied the means to do so. Of course, hard cases always make bad law, but I have never forgotten that episode and I thought of it immediately when the noble Baroness, Lady Lister, moved her amendment.

Baroness Sherlock: My Lords, I hesitate to lower the tone after that marvellous exposition by St Sebastian-by the noble Lord. Perhaps the Minister will answer some questions for me. I have been reading the very large and very helpful response to the consultation exercise that the department kindly provided. I wonder whether he would help me with the sums. His Treasury and City background might help me to understand this. I am grateful for the briefing from Family Action and I take that briefing very seriously. I noticed that it had been giving out grants to people in need since 1869-even longer than the Social Fund-so it has some knowledge whereof it speaks. When organisations like that warn that things are about to get very bad, we need to listen, because they know what they are talking about.

Perhaps the Minister could help me to understand. I gather that in terms of crisis loans, during 2010-11, £152.9 million will be disbursed, and it is intended that from 2013-14 that will be replaced by the amount of £36 million, which will be transferred to local authorities. I am assuming that cannot literally be a cut of

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£160 million, or 76 per cent. I presume that there is a gross and net issue here. Perhaps he would help me to understand the effect of that transition.

Secondly, will the Minister tell us what work the department has done in estimating the impact of this recession, or other recessions, on demand going forward? Perhaps he could help us by looking at what happened previously. I note that the briefing from the Government in response to the consultation denies that the recession or youth unemployment had any part to play in the increased demand, although the fact that it started in 2008-09 would seem to imply a coincidence because that was around the same time as GDP began to go downwards. I wonder whether he could help us to understand that as well.

Thirdly, perhaps he could help me to understand how the new system will respond to changes? For example, how flexible can it be to changes in the profile of need in a particular local authority area? For example, if another of his policies such as the benefit cap were to have the unfortunate consequence of causing significant numbers of poor people to move from one area to another-I am not suggesting that it will, this is just for the sake of argument-how would that be affected by a local authority in that circumstance, or a circumstance like that?

I have one final question. Does he have any concerns about the consequences of what seems to me to be a move between what is currently annually managed expenditure to something that effectively becomes-albeit indirectly-a form of DEL? The only reason I ask is because one reason why something like this is part of the social security system is because it responds-and is managed and funded by central government to respond-to the changing profile of the labour market and the people in need because of changes in circumstances. How will government finances handle that in future?

Lord German: My Lords, I shall add some further questions about process. I shall not to go over the same ground that we have just covered, but I am very grateful to the noble Baroness, Lady Lister, and to my noble friend Lord Kirkwood for the historical background. This morning I started reading a report by her colleague, the Assembly Member for Cardiff West, on this very issue and on Labour's history in it in the past few years. In his report on this issue, the pride of place in the new Labour era goes directly to the noble Baroness, Lady Lister, with a major quote about the need for reform of the system. He then traces the whole history of the Labour Party's involvement and engagement with the Social Fund during the previous Government, and ends with a quote from the last document which we have, the DWP document of March 2010, which says that,

that the existing scheme was "passive", doing,

and that it was "short-term", "complex", and presented a series of "delivery challenges" if the system were to,

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I have no idea whether that is an accurate recording but he took his starting point from the noble Baroness, Lady Lister, and his end point is that there is a problem which has not been dealt with, so reform is obviously essential.

The second piece of quite interesting information which I took from this document is on the report of the Calman commission. I do not want to appear like a cracked record here but I shall refer to an amendment in a moment. It is not clear to me which country we are talking about and whether "national" means England. However, one issue considered by the Calman commission, which was of course set up by the three parties represented around the centre of this Committee, was to recommend to the Government that the discretionary elements of the Social Fund should be devolved. The previous Government, in their response, said "We'll think about it". I presume that the thinking has now moved on, which is why this issue may well be before us in terms of devolution. In a moment, I want to trace what I think is going to happen in Scotland and Wales because, although there is not yet a clear picture, there is a sense of direction in Scotland, and one beginning to emerge in Wales, as to what will happen.

First, Calman treated this as not being part of the major social security network. He regarded it as a different animal. Another quote which I liked, because I had the greatest respect for this Labour politician, is when the late Donald Dewar said that the Social Fund was,

Reform was therefore essential, but that essential reform is still on the table. What is likely to happen in Scotland is that its Government, as I thought, are likely to add an element of their own funding to this sort of money and to create their own scheme, so that there will be a different scheme in Scotland, administered by I do not know whom-possibly by the third sector-and managed on a whole-Scotland basis. The argument that is developing in Wales is very similar: there will be a possibility of an all-Wales scheme, delivered by and responsible to the National Assembly for Wales.

In that context, we therefore have to be clear that most of the questions and discussion which we have had so far are about what happens in England. I respect that and it is very important, because that is probably where there is now the greatest area of concern about how it will all work. I am sure that in Amendment 86ZZZEB, tabled by the noble Lord, Lord McKenzie, proposed new subsection (5A)(a) and (b) refer to England, and that the word "national" in "uniform national appeals process" in new subsection (5A)(c) again refers to England.

We have this problem because we refer to nations. We have a National Assembly for Wales. That means that Wales is a nation. I am not certain how we refer to England at the moment. Presumably that is what the amendment needs. There has to be concern about how this will be delivered. It is appropriate to leave the structure and nature of the business to Governments in Scotland and Wales for them to shape in a way that is appropriate to them because they will have the legislative and financial competence. Of course, this Parliament will have no competence in that matter

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because the formula will be moved on through a structure that will eventually end up in the Barnett formula. It is important perhaps to look at models that we can share across the United Kingdom. The one for England is not yet absolutely clear.

Before I leave the issue of Scotland and Wales, I ask the Minister whether there has been any mention in Scotland and Wales of the use of the legislative consent motion. That is the device by which a devolved Administration can either ask for or accept permission to legislate, or give the permission to this Parliament. It works in both directions. I wonder whether that has happened. There is still some concern about the nature of what the Administrations want to do.

I will not repeat the arguments on the ring-fencing issue, but in England it is also the case that where you have accountability for funds that emanate from Parliament, there must be some accountability to Parliament. I will start by asking the Minister about the issue of the accounting officer. If discretionary funds are moved in the way that is described, am I right in believing that the accounting officer for those funds will be the Permanent Secretary of the Department for Work and Pensions? We should remember that by definition this is the person whom Parliament may call to account for the stewardship of the resources within their control. How on earth will the Permanent Secretary of the DWP account for money that has been spent without any ring-fencing or contract of any sort by local authorities throughout England? I would be grateful for an answer to that.

The Bill has no lines of accountability across departments. I would like to know what the line of accountability across departments is. If the Permanent Secretary of the Department for Communities and Local Government were the accounting officer, would they be the accounting officer for some parts of the fund, with the DWP Permanent Secretary having responsibility for others? What are the lines of accountability across departments? Or will accountability be split between various departments? In other words, who should Parliament call to account for these moneys.

The second issue is about reporting back. We have heard about ring-fencing going in one direction. If there is to be an accounting officer and Parliament is to call them to account for those moneys, what will be the reporting back mechanism from local authorities in England to the accounting officer in whichever department it is? If that is not described, clearly we will lose the sense of being able to account for public money. I certainly worry about that.

I have asked a range of questions that need to be answered. I start from the premise that I have worked from this wonderful document. I will give a reference to the noble Baroness, Lady Lister, on this matter. It seems to me that we started with a problem many years ago and ended up with a problem that is still there. We need to find an answer but in so doing we need to ensure that we have covered all the possible corners that may be preventing us getting to the most appropriate solution.

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4.45 pm

Lord Skelmersdale: My Lords, many years ago when my noble friend Lord Brooke was my temporary boss in Northern Ireland, never in a million years did I expect that he would ever be described, or indeed would describe himself, as St Sebastian. The reason I mention that is that I knew that when he became Secretary of State, he had moderately recently been a Treasury Minister. My job in Northern Ireland, inter alia, was to look after the Social Fund in the then 32 Northern Ireland social security offices. It quickly became apparent that the calls on the Social Fund in any particular office at any particular time were extremely erratic. I asked my civil servants if London would object if I moved money around the system in order to try to balance it up. Of course the following year I had to do it again because of that erraticism.

It is all very well expecting the Social Fund, which is expatriated to Scotland, Northern Ireland and Wales as a whole, to operate well with ring-fencing, but I find it absolutely impossible to believe that ring-fencing can ever apply when it is expatriated to local authorities in England for the simple reason that one local authority will build up a certain amount while another will be permanently in deficit. That is not going to help the people whom the Social Fund is intended to help in the first place.

Lord McKenzie of Luton: My Lords, we have added our names to Amendments 86ZZZB, 86ZZZC and 86ZZZD and we support the other amendments in this group. We have our own amendment, Amendment 86ZZZEB, and I should say to the noble Lord, Lord German, that I am happy to accept his amendments to my amendment. Perhaps we can go through the Lobby together when the opportunity arises.

The Social Fund, particularly the discretionary component, helps some of the most disadvantaged and marginalised individuals in the country. We have been given a lot of historical perspective on this, but my brief says that the fund has its origins in the exceptional needs payments scheme introduced by the Labour Government in 1948. However, some may go back a bit further. We should recognise that the fund as it operates today is not perfect. Indeed, a number of noble Lords have made that point. When we were in Government, we paved the way for change and consulted on it. The case we made was the one referred to by the noble Lord, Lord German, which was that the system was short-term, passive and complex. Its role was as a sticking plaster to deal with short-term crises and did not address the longer-term challenges which individuals face, particularly those of financial and social exclusion.

That said, we should never lose sight of the importance of a safety net for those who are in desperate need. We have all received powerful testimony from a range of organisations to the difference that a crisis loan or a community care grant can make when individuals with acute needs are faced with very difficult circumstances. It helps the poorest and the most vulnerable people in our society and we know how an early intervention can prevent a slide into even more desperate circumstances.

The case has been made by others, particularly in a very powerful presentation by my noble friend Lady

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Lister, as to why we should continue to support this. I would like to comment on some of the other contributions. Perhaps I may say to the noble Lord, Lord Brooke, that the great mistake he made was to confront Derek Hatton with a Socialist Worker under his arm. It should have been Militant, and then he might have got a better reception. So far as ring-fencing is concerned, I recall one party conference when a certain Dennis Skinner was speaking from the platform. He addressed the mayor who had come to open the conference and suggested that he should melt down his chain and put it into the housing revenue account, so there are precedents as well.

One of the difficulties I have with the government proposals is in trying to understand precisely their vision of what should result from this process. On page 25 of Local support to replace Community Care Grants and Crisis Loans for living expensesin England, the Government's response to the call for evidence, they say:

"There is no expectation or desire from central government that the new service will mirror the current Social Fund scheme in whole or in part".

If that is right, what is the Government's vision? What are they seeking to achieve? My blood ran cold when I turned to page 27-this was the point made by my noble friend Lady Lister-where it says:

"One of the design issues raised by a large number of respondents is whether provision should be in the form of cash payments or goods and services, including for example food parcels and both new and re-conditioned household items".

The next paragraph says:

"The need to offer recipients choice or control over the item they received was not generally considered a requirement and by a number of respondents it was thought to be undesirable. There was a strong sense that if there is a genuine need recipients will accept the support that is offered".

What sort of country are we living in where we have those sorts of rules? It is "take it or leave it", living off the scraps from the supermarket when they clear the shelves at night.

My noble friend Lady Sherlock pressed on a range of points concerning funding. I shall address Appendix C of the document I just referred to. Bandied around somewhere in the text is a figure of £178 million, but this annexe says it gives us,

The year then was 2009-10, so it was not as up to date as my noble friend. It says:

"We have indicated our intention and already taken action to manage the current levels of demand and spend for Crisis Loans back towards 2005-06 levels. 2005-06 data should therefore be regarded as more representative of the levels of demand and spend at the point of transition to the new local provision".

The gross spend on crisis loans in 2009-10 was £67 million, but what was it in 2005-6? It was £20 million. Is that what the Government are about now, trying to scale back from even the 2009-10 figures to just £20 million in allocating moneys to start this process? It is an absolute disgrace if that is the proposition, and this is supposedly not meant to be about saving money.

Notwithstanding that, the information we have had is that the Government are cutting back on some of these arrangements. Crisis loans for items only following

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a disaster and crisis loans for living expenses have been cut back from 75 per cent to 60 per cent, supposedly aligning with the hardship payment rate under JSA. Crisis loans for living expenses are limited to three in a rolling 12-month period. There is already a process under way to cut back on this spend before we get into the new arrangements. I would like to understand the rationale and the justification for that.

I thoroughly and wholeheartedly support the proposition concerning ring-fencing. What we are talking about is money that goes into local authority budgets, ring-fenced for a specific purpose. The Government have made great play of reducing ring-fencing on local authorities-as we did in Government to a certain extent-but as a technique and as a means of ensuring that the money that goes through to local authorities is spent on that endeavour, it is well tried and tested. There is not a problem in doing it. Indeed, one of the experiences we need to reflect on is what happened to the "Supporting People" programme. That programme was originally ring-fenced. It was then un-ring-fenced, I think with the support of the CLG Select Committee, but at least in those circumstances local authorities were required to continue to report centrally about how that allocation had been dealt with. It was not rigid but at least there was a reporting requirement. I do not know, but perhaps the Minister can tell us, whether any such arrangements are proposed so far as the Social Fund is concerned.

My noble friend Lady Hollis was absolutely right to identify the issues that will arise under two-tier authorities. She suggested that one way of dealing with this would be to have a mandatory allocation to districts, but that raises the whole question of who people will engage with at the local level to get the support they need. Most of their needs will be related to housing, which is at the district level, but some may be related to adult services, which are the functions of a county council. Where people go and what the process will be is entirely unclear.

The noble Earl, Lord Listowel, supported the issues around ring-fencing. He made the point, as did other noble Lords, about the pressure that is on local authorities at this time. They have had dramatic cuts made to their budgets and some of those cuts have been front-end loaded. In some respects, they have had greater responsibilities imposed on them under the Localism Bill. Indeed, what are hard-pressed councils to do when such extraordinary pressures are placed on them? They must try to make decent decisions so as to protect and support their communities. This is another example of the Government, in the guise of localism, pushing down on local authorities and giving them the supposed problem that they are not prepared to face up to and deal with themselves.

My noble friend Lady Turner centred her speech on issues around domestic violence. I wholeheartedly agree with her, and that is why the amendment should be supported.

The greatest difficulty with all this is being able to see what the Government's vision is. Local authorities are innovative and many of them will work very hard to protect in every way they can the vulnerable citizens in their communities, and indeed those from outside

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their communities. The noble Lord, Lord Kirkwood, made the point about connections. If local authorities put in place a focus on people with local connections, it will particularly disadvantage those whom the Social Fund is designed to help-the people who are settling back into a community and perhaps do not yet have a fixed abode. They may be rough sleepers or-I think this is the expression-they sofa-surf, which is when they kip down for the night on friends' sofas here, there and everywhere. Helping those people means that a barrier cannot be put on some localised connection. I would support all the amendments which seek to avoid that.

The noble Lord, Lord Kirkwood, was absolutely right to say that we need consistency of approach and transparency in all this. In part, that is what our amendment seeks to do: it would establish that there should be mechanisms to make sure that we get consistency. As I say, that has to be on an England basis because separate and well funded schemes will operate in Scotland and Wales. That is fine, and we should be happy with that. One of the other challenges here is that these changes are being introduced at a time when there is a whole maelstrom of change going on around localism, welfare reform, our health and social care provisions, and what legal aid support people can receive. In the midst of all that, these changes are being brought forward. They will affect the most vulnerable people in our society, and if we have a duty as Members of Parliament and certainly as members of a Government, above all we should look to protect them. These provisions simply do not do that.

5 pm

Lord Freud: My Lords, the current discretionary Social Fund is clearly in need of reform, as several noble Lords agreed today. From 2006 to 2011, the number of crisis loan awards tripled. The evidence does not suggest, however, that this increase reflected an underlying increase in genuine need, as it was largely independent of the recession. Analysis of the increased demand showed that it was driven by young single people on jobseeker's allowance, many of them still living at home, rather than reflecting a more general trend across all benefit client groups. Strong action has already been taken to get spending under control, and demand has already reduced markedly.

Analysis of the current community care grants scheme shows that the remote operation of a highly discretionary scheme may not deliver the best use of a limited resource. The scheme is often poorly targeted due to the lack of integration with the wider social care agenda. Local authorities and the devolved Administrations are better placed to determine and support the needs of local vulnerable people than the current centralised system.

Clause 69 paves the way for reform of the discretionary Social Fund. Community care grants and crisis loans for general living expenses will be replaced by new local provision designed and delivered by local authorities in England and the devolved Administrations in Scotland and Wales. Budgeting loans and crisis loans for alignment to benefit or wages will be replaced by a national

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system of advances of benefit through the payments-on-account provisions set out in Clause 98. So the majority of the discretionary element of the Social Fund money will still be administered at national level because it is closely aligned to the ongoing benefit system: that is the most efficient way to do it. That discretionary loan fund pot at national level, which revolves, is currently standing, I believe, at £1.2 billion. I compare that with the £178 million going locally which is divided into grants, currently at £141 million, and general living expenses at £36 million. That does not add up to the full £178 million because there is another £1 million of transition funding.

Lord McKenzie of Luton: Will the Minister explain where the figure of £36 million comes from? The 2009-10 figure for crisis loans for general living expenses is £67 million. The Minister is clearly one year on from that, but has the figure halved over that period?

Lord Freud: If the noble Lord looks at page 11 of the government response document, it shows that the tripling was clearly driven by a phone-based service. As I said, we are getting that more under control. The 10-year average spend is £30 million, and clearly we are aiming to get back down to more sensible levels through this method, as I said.

Baroness Sherlock: The Minister obviously has access to in-year figures, which we do not. If he were to project forward from the most recent figures that he has, what would he expect the spend to be?

Lord Freud: At the end of this year, we are expecting it to come down to £60 million.

Baroness Sherlock: That is twice what you are projecting handing over.

Lord Freud: It is on a downward-

Baroness Sherlock: Just checking, thank you.

Lord Freud: There is a downward trajectory, and the measures that we are putting into effect do not reflect that full amount. The full amount is £60 million, but the underlying figure is coming down by more than that if you annualise the latest set of figures.

Baroness Sherlock: I am very grateful to the Minister. I just wanted to be sure that I had understood, for the record, that he is proposing to halve the amount being spent on crisis loans for general expenditure as a result of this change. I thank him very much for that clarity.

Lord Freud: I will make it absolutely clear that this is not a halving on an annualised basis when one considers the decline in trend. I would like that on the record as well.

I will take the question raised by the noble Baroness, Lady Lister, on the risk of high-cost lenders, or loan sharks as she referred to them. We recognise the danger that illegal and high-cost lenders pose to vulnerable

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people, who can become very dangerously indebted if they are driven to use such services. We are committed to continuing to provide an interest-free lending facility for those who are least likely to be able to access mainstream credit. We call the process "budgeting advances". That is a national provision of payment on account that will replace Social Fund budgeting loans. The budgeting advance will be paid to those vulnerable people least likely to access mainstream lending, to help ensure that they are not driven to use illegal lenders. That process, when we put it into the universal credit, will have a much different feel to the paper-driven process that we have today. The two systems of budgeting advances will run in parallel while we introduce the universal credit.

Baroness Hollis of Heigham: I note the Minister's figures-which startled me-about what he thinks will happen to the crisis loan for general living expenses. Given that those are loans, does he expect there to be any virement? In other words, will the budgeting loans, the alignment process and the rise to 1,500 and so on meet some of the suppressed demand that will, in future, exist for crisis loans?

Lord Freud: My Lords, I am not sure that I got the point of the question. Would the noble Baroness repeat it?

Baroness Hollis of Heigham: Yes, by all means. Crisis loans are for general living expenses. There is therefore a close connection between them and general budgeting loans, which also deal with those expenses-unlike community care grants, which are in a different category altogether, and which can be completely ring-fenced. Do the Government expect any virement between the two funding headings? The depressed figure that was responded to by my noble friend Lady Sherlock, which appears to suggest that about £60 million was coming down to £30 million, would none the less be offset by an appropriate increase in the budgeting loans that he is talking about as payment on account.

Lord Freud: My Lords, the straightforward answer is that currently we are not seeing that alignment, based on the measures that we are taking.

Baroness Hollis of Heigham: Do you expect to see it?

Lord Freud: We are not expecting it.

Baroness Lister of Burtersett: My Lords, perhaps I, too, may ask a question on the crisis loan budget. As I understand it, at present, if there were a disaster, people could get help from crisis loans. If there were a disaster, for example a flood-and more and more flooding is taking place-would local authorities get additional money to help out, or would they have to use the money that has already been transferred from the DWP, which may already have been spent on other things for that ring-fencing? Will there be provision to help people in the case of disasters?

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Lord Freud: In the case of disasters, other measures would be introduced. This will not be a core methodology to deal with particular localised disasters.

Baroness Lister of Burtersett: At present, people can turn to discretionary crisis loans in such cases. I would feel more reassured if the Minister could tell us what that provision would be.

Lord Freud: I will have to fall back on offering to write on that particular matter. I do not know exactly how we finance local disasters. In practice, the Social Fund has not been much used in that area. However, I will have to write on how funding for local disasters works.

Baroness Hollis of Heigham: Perhaps I may give the noble Lord an example. It may not be as extensive as flooding, but a not untypical example is a gas explosion in a high-rise block of flats that results in 80 or 100 families having to be rehoused and needing financial support to buy furniture and this, that and the other. Is it expected that that will come from this provision or will there be additional allocations?

Lord Freud: The obligations of the local authorities are centred on housing provision. There are a number of duties around what local authorities have to do to rehouse people according to their homelessness obligations. That is where some of the crises would be dealt with. Local authorities could look to provide the support using some of the Social Fund money that they have available. In practice it will be a more efficient use of money because we will have a one-stop shop for that kind of problem in the housing area.

Lord Boswell of Aynho: My Lords, would it not also be reasonable, in cases of very substantial disasters extending perhaps beyond the compass of a single block of flats-although that would be a serious local tragedy-to look at the Bellwin scheme, which as I understand it is designed to deal not with the initial tranche of costs but with the substantial extra costs that local authorities will face if they are confronted by a major natural or physical disaster?

Lord McKenzie of Luton: The noble Lord is absolutely right. That was deployed in relation to the flooding in Cumbria.

Baroness Lister of Burtersett: I raise this to ask not so much about housing but about people's white goods and furniture that may have been destroyed for whatever reason. My understanding is that, at present, they can turn to discretionary crisis loans in such cases.

Lord Freud: As I say, that is not a major use of the fund. Clearly, the local authority with its housing obligations is very well placed to manage that on a holistic basis. In the case of that example, there would be a better and more efficient use of funding than we have today.

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