Welfare Reform Bill

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, "““the people most affected by this proposal are among the most vulnerable in society. Very good reasons are needed before abolition of the right to an independent appeal in such circumstances, an appeal which has existed for over 50 years””—" in 1986. It continued: "““It would probably be the most substantial abolition of a right to appeal to an independent tribunal since the Council of Tribunals was set up by Parliament in 1958, following the Franks report. It is for these reasons that we are so critical of the proposal. In our last Annual Report we described it as highly retrograde””." 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 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, "““some clearly established machinery that was separate from and outside the normal management chain of . . . the social security system . . . to provide the kind of confidence that hon. Members””—" he was in the Commons at the time— "““felt was necessary to show that an element of independence was being applied””—[Official Report, Commons, 19/5/86; col. 43.]" 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. 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— "““in four years, while achieving substantial reform of the welfare system. It will not succeed without a good understanding of its expenditure, a clear vision, and a coherent, well-informed plan. ""There are signs of progress, but the Department will have to improve in all three areas if its March 2015 targets are to be realistic””." 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 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, "““involved an adult with both mental and physical health problems””," while 1.8 per cent, "““involved children with both physical or mental health problems””." 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,"““found to be spending more than 10% of their weekly income on debt repayments””." 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 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.