Welfare Reform Bill

I will also speak to Clause 16 as a whole. It gives the Secretary of State power to restrict crisis loans or budgeting loans from being provided by the Social Fund if external providers are available. Perhaps I should say a word about the clause at the beginning of my remarks on the group, before speaking to the amendment. The rationale for the clause is to prevent Social Fund claimants double-claiming from both an external provider and Jobcentre Plus. From the Peers’ information pack, I gather that it is also envisaged that external providers would be expected to give their customers financial advice to help them over the longer term, as we have just been talking about. That could be a useful measure, but it must be monitored properly and there must be an independent complaints system in place. Having the clause in the Bill before anyone has an idea of how a Social Fund scheme from external providers would work is part of the deeply unsatisfactory nature of the Bill, where not just the fine detail but the bigger picture is to be enshrined in unamendable regulations. I gather that there will be two further sets of consultation before any action is taken, which is perhaps just as well because it does not look as though external providers are exactly falling over themselves to lend to this socio-economic group at the moment. Before leaving the subject of consultation, I should say that I gather from one charity that makes one-off grants to individuals in need, primarily for basic household equipment, that the consultation held last December, before the Bill was published, lasted only three weeks and few people knew about it in time to respond. That charity, which tries to ensure that it does not replace any statutory funds available, last year made 3,000 one-off grants throughout the UK. It is concerned about the operation of the Social Fund, which has a direct impact on its charitable work, and it makes the reasonable point that the further and longer consultations to be held will take place after the Bill has become law. It is particularly concerned about the lack of an independent review, which I will come to in a moment. KPMG, which conducted a feasibility study on behalf of the Department for Work and Pensions last November, found that the break-even point for running such a scheme would be achieved only by charging an APR of 37.7 per cent, although we know that the Government have said in terms that they have changed their minds about the charging of interest and that it will not happen. Perhaps the Minister can enlighten us further about this part of the Bill. My noble friend Lord Kirkwood will be particularly sorry that we have reached Amendment 128 while he is still away, as he was looking forward to moving it. During the Bill’s passage in the other place, the then Minister, Kitty Ussher, confirmed that the citizen would have no statutory right of review against the decisions made by external providers of the Social Fund. Instead, a complaints process will be incorporated into the contract with the loan provider, which I suppose could mean different complaints procedures for different providers, for all we know at this stage. The amendment allows for the appeals process in respect of an external provider to be specified. We gather that it is intended that external contractors will be regulated by the FSA. Borrowers could complain to the financial services ombudsman. In the view of the Independent Review Service and others, this is not an equivalent standard of redress for service users, who need an independent, proportionate and, above all, quick dispute process. The people who apply to the Social Fund for help are among the most vulnerable and needy. At present, the Independent Review Service completes more than 99 per cent of standard cases within 12 working days, 95 per cent of complex cases within 23 working days, and 88 per cent of urgent crisis loans within 24 hours. By anyone’s reckoning, these are impressive figures. Compare that with the Financial Services Ombudsman’s service standards, which show that it aims to settle most disputes within six to nine months. The Bill also makes provision for goods instead of cash to those who were awarded community care grants for white goods or large furniture items. The bulk-buying power of central government should mean that these goods are cheaper and thus better value for the taxpayer, helping the cash-limited grant budget to meet more needs for more people. However, the intention is to exclude these awards from the statutory review process, save for the correction of obvious mistakes. The IRS sees many cases where decisions on grant awards have to be changed because the award for a particular item was not the appropriate one. Inadequate or inappropriate awards in the form of goods may not be reviewable, leaving the citizen without resolution of the difficulty which brought them to the Social Fund for help in the first place. To sum up, I shall use the words of my correspondence from the charitable trust I mentioned earlier, the RL Glasspool Charity Trust. It says: ""The Independent Review Service of the Social Fund is a great source of expertise, has a clear overview of the operation of the Social Fund nationally and the Commissioner reports to the Secretary of State"." I urge the Government to accept the amendment. I beg to move.