Welfare Reform Bill

My Lords, I would that I had more time to expand on this but at this stage in the day I hope that I can dispatch this amendment with some expedition. However, I want to say in passing that for me this is potentially quite a serious issue. By way of background, as the House will know, since December 2008 the Government have been promoting, if that is the right word, a consultation on the future of the Social Fund. The Social Fund is an absolutely crucial element in providing a safety net for low-income families. In Amendment 54, I am particularly concerned with the discretionary element of the Social Fund, which deals with the provision of budget loans, crisis loans and community care grants. Noble Lords will know how important they are. They are discretionary and in the recent past they have provided a lifeline to many families. Particularly in relation to the discretionary elements of the Social Fund, the review process, both internally within the department and externally with the independent review service, has been absolutely crucial in underpinning people’s rights, dealing with appeals properly and establishing an ongoing review of how the fund is working. I do not know where we are in relation to the consultation and whether the back-to-work White Paper will deal with the future of the Social Fund more generally, but that is not my purpose this afternoon. My purpose is simply to advert to the fact that the Government are struggling to move in the direction that they originally indicated. Early indications were that the Government were looking for other organisations to offer credit to customers. It came as no surprise to me that people were not killed in the crush in coming forward to deal with low-income families who are struggling and are therefore technically very bad credit risks when viewed from a commercial loans point of view. Ministers rather optimistically hoped that they would be able to get interest rates at 26 or 27 per cent. However, the KPMG study conducted for the department in November 2008 found that the interest rate would need to be something like 37 or 38 per cent before you could even get anyone interested in coming to serve that need in the market. I do not know where the generality of the consultation and the future of the Social Fund lie; I say only—and I say it with complete compassion and conviction—that it is a quintessentially important part of our existing system. That brings me to the content of Amendment 54. I am considerably concerned at the prospect of any future changes to the Social Fund ending up with the external provider of Social Fund loans not being part of the external review fund that we have at the moment. I know Sir Richard Tilt well, as do other colleagues. He has had a very distinguished career as the Social Fund Commissioner, which I think is about to come to an end. He is a serious man and he knows the system thoroughly. He has been an advocate of the process of external review continuing via the system that exists and, for my money, if someone such as that says to me, "This is not a safe change to contemplate", that is a matter of concern which I hope colleagues in the House will share. I noticed that the former Minister, Kitty Ussher, made a statement in a letter to the National Association of Welfare Rights Advisers, saying: ""External Provider Social Funds Loans will not be part of the Social Fund, therefore they will not be subject to the current Social Fund internal review process or to the independent review provided by the independent review service"." Instead, the Minister suggested that any reviewer complaint process would be covered by Financial Services Authority legislation. I am not an expert on that legislation but I think it covers organisations like Lehman Brothers and the Halifax Building Society. The regulations in the provisions for protection for consumers in that context are in a different universe from the kind of low-income families that have to make applications to the Social Fund. I find it incredible that that suggestion was ever made by a Minister representing the DWP, although she was not a Minister for very long. It is frightening. This amendment underlines the importance of the confidence that the independent review service brings to the implementation of the Social Fund, particularly a discretionary Social Fund which is complex but provides an absolutely vital safety net for low-income families in this country. It should not be changed, altered or abandoned without serious consideration being made to provide a system of review. If it is not Sir Richard Tilt and his heirs and successors, it should be something equivalent to an independent review. Certainly, the Financial Services Authority is not a mechanism in which I would have any confidence for doing that. That is the purpose of the amendment. I beg to move.