Welfare Reform Bill

I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on the way in which he has introduced this group of amendments. His amendments and those tabled in my name cover much the same ground. Like him, I am deeply concerned that the Government propose to remove the discretionary element of the social fund without giving us a great deal more clarity about how the poorest and most vulnerable will be protected, about the adequacy of the replacement system, about the protection of vulnerable people without a local connection—a matter to which I shall return in a moment—and about the lack of a proper system of review. As my hon. Friend rightly said, the numbers involved are significant, with 640,000 applications for community care grants and 3.6 million applications for crisis loans. We are not talking about a modest amount of money, and those figures represent a great deal of need. He also suggested that they represent only the tip of the iceberg of need. Of course we accept that there cannot be unlimited capacity to meet need, and it is clear that, were more resources to be made available, more need would come out and be met. I want to pick up on a point that my hon. Friend made in response to an intervention. Despite the numbers of people who apply for and receive loans and grants under the discretionary grant, and the fact that when local government takes on this responsibility it will be accountable, in the spirit of localism, to its electors, we must recognise that the characteristics of people who seek assistance from the social fund do not make them a cohort of people that is likely to influence local politicians on a significant scale. This will tie into comments that I will make in a moment about what we should do with people with no local connection. All the evidence that I and my hon. Friends have received from our law centres, citizens advice bureaux and other organisations shows that the claimants of discretionary social fund elements are very likely to be highly mobile people in a crisis that frequently severs their connections to the local community. They are not likely to be over-represented among those on the electoral register, or to wield a significant amount of local clout. They would not always need to do that; a good, responsive local authority will map and respond to their needs without it, but the reality is that, in a competition for scarce resources, that will not always be true of all local authorities. We are completing the stages of the Welfare Reform Bill today, having been asked to make decisions on a number of important elements, which we discussed on Monday and are debating today, without having been given a great deal of substance or detail about how those elements will work. The Government called for evidence on the discretionary element of the social fund in February, but the consultation did not close until we were in the middle of the Bill's Committee stage. That worries me. Yet again, the Government seem to be pushing ahead with their proposals even though we have not had a proper opportunity to reflect on the breadth of views and opinions of people with experience of and expertise in the subject. The Minister might care to report to the House on what the responses to the consultation actually said. It would be nice if she could assure us that all the responses would be placed in the Library. I think I can guess, however, that their overwhelming tone will be one of deep disquiet, and that they will be urging the Government to think again, which is consistent with the principles outlined by my hon. Friend the Member for Hayes and Harlington. As he said, almost all the organisations with expertise and specialist knowledge in the operation of the social fund have told the Government of their worries. Let us take note of who they are. They include: Age UK; the Association of Directors of Adult Social Services; Barnardo's; the Child Poverty Action Group; Citizens Advice; Community Links; Crisis; Disability Alliance; Family Action; the Family Fund; the Family Rights Group; Gingerbread; Homeless Link; the National Housing Federation; Oxfam; Platform 51; the Prison Reform Trust; Save the Children; Scope; and St Mungo's. I am sure that there are others. Those organisations are the big society in action. In many cases, they provide complementary services to the social fund, and they are expressing their concerns about the Government's proposals and about their capacity to deliver to the people who will need their services when the changes are introduced. If the Government are serious, as I have always thought they were, about the idea of the big society and about a partnership with voluntary and community organisations, surely the first principle must be to listen to what those organisations are saying. Let us take an example from that list. Oxfam has said:"““The Social Fund provides vital support for people in times of crisis. The government proposes to devolve much of this money to local authorities, but without any statutory duty on them to provide an equivalent system of protection. This runs the risk of driving people to use high-cost lenders, reducing their chances of managing their debts successfully. This is particularly important as Universal Credit constitutes a radical reform, and it is almost certain that its introduction will suffer from teething troubles. These are likely to cause significant need for emergency payments like crisis loans, just as they are abolished. The Social Fund needs to play an important role in protecting people during this transition, which further supports the need for a delay to the change.””" The Committee also heard directly from people who know more about the social fund in all its strengths and weaknesses—we know that there are some weaknesses in the operation of the existing scheme—than anyone else. They included Sir Richard Tilt from the Social Security Advisory Committee, who said:"““Community care grants are the bit I am most concerned about—£141 million. By the time that 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.””" He also said:"““My view on all this is that we have a UK social security system and that, for the past 25 years, the discretionary social fund has been the ultimate, final safety net for the poorest and ""most vulnerable…I would argue for a UK safety net underneath it.””––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 82-3.]" Professor Kempson told the Committee, in respect of the role of local authorities:"““Some will provide a better service than we have now””." I do not think that that is in doubt. There is excellent practice in local government. Like my hon. Friend the Member for Hayes and Harlington, I also came to the House after serving in local government and I am a great advocate of it. Professor Kempson said:"““Some will provide a better service than we have now; many will provide a worse service; and some, I fear, will provide almost no service.””" She also said:"““As I read it, there will be no ring-fencing, and I cannot even see that there is any proposal as yet to build in any form of accountability by local authorities. That is the very least that is needed.””––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 82-3.]" We know that the social fund has many flaws and has been subjected to scathing criticism from the Public Accounts Committee, the National Audit Office and others. I completely accept that those criticisms need to be taken seriously. The issue before the House today, however, is whether the Government's proposal risks making things worse by entirely removing that essential safety net without addressing the genuine concerns of the present system. The Minister made it absolutely clear to the Committee that"““there is no expectation that local authorities will replicate the current scheme.””––[Official Report, Welfare Reform Public Bill Committee, 3 May 2011; c. 731.]" She is nodding at that. She made it clear that, when the discretionary social fund is removed, local authorities will provide a service equivalent to the present one. She said that this was not devolution to local government, but something fundamentally different. Central to that is the fact that the Government do not expect local authorities to manage loan schemes, as happens now with the crisis loan scheme, and that as loan repayments were topping up the available resource through the current crisis loans, the capacity to provide an equivalent level of service through emergency funding is now severely restricted. The figure I was given was 84%, although the Minister told us in Committee that it was 50%—and I am happy to accept her correction. None the less, the cash sum as an annual figure starting from now that will be devolved to local authorities does not tell us much about the funding that will available for the equivalent level of crisis service once the scheme gets under way because that 50% repayment will very quickly fundamentally erode the value of the service. As we have heard, the likelihood is that it will drive people into the arms of the cowboy and high-interest lenders as well as into debt. The current proposals expect local authorities to devise their own schemes for emergency support, but without ring-fencing or without specific accountability attached to the funds. It is highly likely, as we know, that some or all of the funds can be diverted into other local priorities and the safety net would disappear. The Government also envisage local schemes that will make use of the provision of other cash support to assist people in need, as my hon. Friend the Member for Hayes and Harlington said, emphasising the potential use of credit unions, charitable support, recycled furniture outlets and food banks. Setting aside whether that is really the kind of service that we want to operate, it has to be accepted—this is central to our thinking—that in many cases, although not all, when people are in need of emergency assistance, money is the best way of helping them to purchase the goods that they are likely to need. That is very much in the spirit of empowerment, which we often hear the Government talk about in other respects. When people are at a crisis point in their lives and turn up to ask for assistance—perhaps fleeing domestic violence and needing to set up a new home—I fail to see how it empowers them when the only thing available is a second-hand recycled white goods store that may or may not have the form of assistance that they need. Whether or not it will be good value for money is another point. We all know that second-hand and recycled goods are of less value than new ones. There are all kinds of practical issues to consider.