My Lords, I thank the noble Lord, Lord Kirkwood of Kirkhope, for initiating this take note debate on a very important subject. I apologise if I repeat any of the points that he made, but they bear repetition because there has not been sufficient publicity about the implications of these important regulations. The SSAC, as we have heard, is very critical of them, especially of the lack of robust analysis of the costs and benefits. The impact assessment that the Government have produced in response is certainly an improvement. Whether it constitutes that robust analysis is another matter, but it does at least give us more information on those who are likely to be affected. I accept that it does give some credence to the original—unevidenced—claim that many affected would be,
“coming to benefits from relatively well paid jobs”,
as the lowest paid are more likely to have linked claims and therefore not be affected. Nevertheless, nearly two-fifths of JSA and three-fifths of ESA unlinked claims were from those earning less than £5,200.
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The impact assessment makes much of the fact that about half JSA claimants in employment in 2013-14 have been paid monthly and they should therefore have a month’s wages to tide them over. However, it also has to acknowledge that those on lower earnings were more likely to have been paid weekly. In fact, the majority of those who earned up to £10,400 were. If we include “other”, which I guess is probably fortnightly, then it is the majority of those earning up to £15,600. As CPAG—and I declare an interest as honorary president—warned with some restraint:
“Claimants leaving low-paid jobs paid weekly or fortnightly will not necessarily have a large, in-arrears payment to cover them for seven days without income, especially with benefits being paid in arrears too”.
The noble Lord also made this point.
The impact assessment also shows that only 36% of unlinked JSA claimants had savings of £100 or more to tide them over. The majority had less than £100 and, in the DWP’s own words,
“could be deemed to be less resilient in a vulnerable time just after losing work”.
Never mind, that is not going to deter the DWP. We are not told what proportion of those affected is likely to be in arrears or debt when they lose their job. Given the high level of debt and arrears and the high level of in-work poverty, I would have thought that that might be relevant. Can the Minister give us that information now?
Notwithstanding the Government’s soothing words, in response to the SSAC, that they believe it is,
“reasonable to expect the great majority of ESA and JSA claimants to support themselves during the first seven days of sickness or unemployment”,
they acknowledge that the change “may” cause hardship for some individuals and families, including, according to the evidence presented to the SSAC, homeless people, people with mental health problems or learning difficulties, ex-prisoners and domestic violence survivors.
What options are open to those who cannot afford to lose this money? The Government consider that short-term benefit advances provide sufficient mitigation, but they do not accept the SSAC’s recommendation that they should be proactively and consistently signposted. Research into why people use food banks published today by CPAG, the Church of England, Oxfam and the Trussell Trust, which I will come back to later, demonstrates the importance of this recommendation. It found low awareness of the advances among those who needed help because of benefit delays, practical barriers to making a request including lack of access to a telephone or being advised by Jobcentre Plus to use other emergency support, including the food bank, instead, and refusals of STBA claims that were shown to be legally incorrect. Will the Minister now commit to reviewing the administration of STBAs, in the light of this evidence, and reconsider the Government’s rejection of the SSAC’s recommendation? The SSAC points out that, even for those who get them, these advances have to be repaid at a high payback rate. The SSAC says:
“For those struggling with existing debts, it may generate a further downward spiral of accumulating indebtedness”.
The fear is that the same will happen without an STBA, if claimants have to turn to payday loans or loan sharks to fill the gap.
The SSAC also points out that local authorities are unlikely to help. Some only extend help to those already entitled to benefits. This is a Catch-22: until you are entitled, you cannot ask for help. Moreover, the Local Government Association found that three-quarters of local authorities expect to scale back or scrap their local welfare assistance schemes if separate identifiable funding is ended, as is threatened. Like the noble Lord, Lord Kirkwood, the SSAC shares the scepticism of many respondents about the statement, in the original equalities impact statement, that the change would not have any impact on charities. Is the department not aware of the extent to which benefit delays are cited by food banks as a reason for people turning to them?
As I said, this morning I attended the launch of a report into why people use food banks. It was very moving and it is a pity that the Minister’s colleague, Mr Webb, who was supposed to speak at the launch, decided not to at the last moment. I think he would have learnt something from listening to people talking about the shame they feel going to food banks. One woman was practically in tears, and indeed the researcher said that the evidence was so harrowing that the transcriber rang her to say, “I do not think I can carry on doing this”. It was an opportunity missed for the department to actually hear what is happening on the
ground. The research has found that benefit delays account for almost one-third of those turning to food banks, and in some places it is more like four in 10 cases. What came out of the launch is that even very short delays can be the tipping point for some people—so food bank providers should beware.
As the noble Lord has said, the impact assessment states that the savings generated by this change will decrease as universal credit is rolled out, but that is only because the savings are transferred to universal credit itself, and will be considerably larger because that rolls up the children and housing components. The TUC has drawn attention to the even greater hardship that this is likely to cause, and I would be grateful if the Minister could write to me with the department’s response to the TUC recommendations. I would also ask him to give serious consideration to the recommendations made by the CPAG that under universal credit, housing costs and payments for children should be exempted. That would not sacrifice the policy intention of the change we are debating today. Better still would be if the noble Lord, Lord Kirkwood, managed to get any subsequent regulations around universal credit not passed—I will see him on the barricades.
To conclude, what is the rationale of the policy intention? It is partly to discourage short-term claims, but as the SSAC noted, some have suggested that this could be counterproductive. If a family is in financial hardship during the waiting days, looking for work, which in itself can incur costs around transport and so on, might not be an immediate priority. The second rationale, as we have already heard from the noble Lord, is saving to spend. The Explanatory Memorandum to the regulations states that the Secretary of State decided that the potential risks of the policy,
“were outweighed by the benefits that could be derived to claimants from reinvestment of the financial savings”.
The SSAC asked for evidence to identify more clearly the cohort of people who would gain from this reinvestment. For example, will those who lose benefits through this change expect to receive specific and additional help to return to work more quickly than they otherwise would have done? Unless I missed it, I have not seen an explicit answer to that question, so perhaps the noble Lord could provide the answer now. Moreover, it seems that the reinvestment is really about more sticks to get people into work, however helpful some of them may be, and no carrots in sight—unless they are provided by a food bank.
The SSAC concluded that, on the basis of the evidence to date, it was sceptical that the case had been made. I cannot speak for the committee, but despite the further evidence supplied as a result of its helpful report, I also remain sceptical.