COMMITTEE FOR SOCIAL DEVELOPMENT
OFFICIAL REPORT
(Hansard)
Welfare Reform Bill
2 April 2009
Members present for all or part of the proceedings:
Mr David Simpson (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Mr Mickey Brady
Ms Anna Lo
Mr Fra McCann
Miss Michelle McIlveen
Mr Alban Maginness
Ms Cáral Ní Chuilín
Witnesses:
Mr Les Allamby, Law Centre (NI)
Ms Laura Niwa, Law Centre (NI)
Sir Richard Tilt, Social Security Advisory Committee
The Chairperson (Mr Simpson):
The first briefing is from the Law Centre (NI). The Welfare Reform Bill is currently progressing through the House of Lords. Its First Reading was on 18 March 2009. Northern Ireland’s version of the Bill is expected to be introduced to the Assembly this autumn. Representatives from the Law Centre, Les Allamby and Laura Niwa, will, of course, brief the Committee. Members have been given the Clerk’s covering note, a copy of the Assembly Research Services paper on the Welfare Reform Bill and a copy of the Law Centre’s briefing papers.
You are very welcome. I believe that Les has attended the Committee previously, although I am not sure about Laura. You will find that we are a happy bunch — at times. We have our moments, I must say. We are very glad that you are present. I ask you to deliver your briefing, after which members will ask questions.
Mr Les Allamby (The Law Centre (NI)):
Thank you, Chairman. You are all in your usual cheery form.
The Chairperson:
Well, it is early; it is only 11.15 am.
Mr Allamby:
This morning, my presentation will be a canter through the Bill, which will, hopefully, encapsulate its key elements. I will cover the social-security elements and the proposals for giving disabled people greater control over money and access to services. I will then hand over to Laura, who will deal with one of the key provisions that we have discussed with you previously — the post-Gregg Review expansion into dealing with lone parents and getting them into work. There will be two parts to the presentation.
In effect, the Welfare Reform Bill is four separate pieces of legislation that are stitched rather uneasily together. I will concentrate on the first two parts: social security and the rights of disabled people to control services.
The Welfare Reform Bill contains provisions for joint birth registration, which I understand will not be implemented in Northern Ireland or Scotland, so I will not talk about those. There are also some child-support provisions, which are primarily designed to overturn a defeat that the Government suffered in the courts, about how to push fathers, mainly, into paying child support through the removal of their passports and driving licenses. I will not go into that either.
My initial thoughts are that there is a lack of really important detail in the Bill, because much of that detail will be contained in regulations. As this Committee knows better than most, the important items are often in the regulations. Fairly unusually, the Department for Work and Pensions (DWP) has yet to publish the regulations in Britain, so we cannot really see the sort of detail in practice. We do not know entirely what their thinking is, although we can make an educated guess.
The Welfare Reform Bill contains only around half of the proposals that are found in the White Paper. Therefore, when reading the Welfare Reform Bill, you really need to have the White Paper next to it. That is because many of the powers to introduce the White Paper’s provisions are already included in previous Welfare Reform Acts, so this is very much an evolutionary process. It is important to bear in mind that the White Paper is still quite important: it has not left the stage because of the Bill.
As regards the importance of the delegated regulations, the sort of information that is not yet available is the detail of how rules on work-for-your-benefit schemes will operate in practice. We are missing the sort of detail that explains when someone will be exempted from the requirement to undertake such a scheme, or what the arrangements will be for lone parents, for example, if they are pushed into the scheme. We do not know the detail of the powers that will be delegated by the Secretary of State in Britain — and, potentially, by the Minister in Northern Ireland — to the voluntary and private sectors, short of decision-making in implementing training and encouraging people back into work. Those are pretty important points.
We do not know what sort of exemptions there will be around creeping conditionality in a number of areas; they may look exactly like the existing scheme, but we will not know until we see the regulations. So, important things are still going on, and as a result, you will get a fairly broad review at the moment, rather than a very technical one.
The first key issue is that the Bill contains a proposal to abolish income support. It is very radical; it is part of Government’s aspiration to create a single working-age benefit. However, in our view, the DWP is going about it in the wrong way. It seems to be very premature, because the DWP is setting out an aspiration without a map, route plan or timetable and, frankly, without even a clear destination. That does not make a great deal of sense.
There are some advantages in having a single working-age benefit, particularly in reducing complexity, but there are also some potential downsides. As ever, the devil is in the detail. One will need to see how certain types of people who are in receipt of income support, such as those who are unable to work due to family or caring commitments or disability, will be dealt with under any single working-age benefit.
In fairness to the Government, they have said that they will not implement the benefit and apply it to carers, for instance, until they are clear about how carers will sit in the benefit system. It is clear that it is a long-term, rather than a short-term, ambition. In our view, it would be better to set out the detail, to consult on it, and, subsequently, to legislate; not the other way round. Therefore we have concerns about starting from the wrong position, with regard to the abolition of income support.
Another part of the Bill relates to the tightening of contribution conditions for employment support allowance (ESA) and contributory jobseeker’s allowance (JSA). Currently, potential claimants have to earn a certain level of income in contribution years in order to qualify for contributory ESA or contributory JSA. The Welfare Reform Bill proposes moving to a system in which the claimant will have to have worked 26 weeks in each of the two tax years before the year of the claim.
By way of providing a rationale for that proposal, the Department for Work and Pensions said that it had concerns about a small number of people who can earn large sums of money when working for a small number of weeks and who then qualify for contributory benefits. That may happen. However, the Bill would exclude a larger number of people here who do not work for 26 weeks in the year because they work seasonally, or because they can work only occasionally due to their health or they work for short periods due to the current labour market situation. Those people tend to be at the lower-earnings end of the labour market. Those people will find it more difficult to get the insurance and contributory benefits.
The Beveridge vision of an insurance-based scheme has long withered on the vine, and it continues to do so. That is unlikely to be reversed by the current Government — or even by another Government, if there is a change in the near future. Nonetheless, we think that the insurance principle is important, and an erosion of that is a retrograde step.
The other part of the Bill contains some provisions to withdraw dependency additions, which are paid to the partner, from maternity allowance. They also propose to take the adult dependant addition away from carers’ allowance. There will be some transitional protection over a number of years. It will save money, but people who have been in work for only a short time will not qualify for statutory maternity pay. Those people are vulnerable because of their income and they have to rely on maternity allowance. The benefit is protected because, if the claimant’s adult dependent is working, he or she will not get that additional allowance. If the person in receipt of maternity allowance lives with another adult who is not working, taking away an adult dependent addition is penny-pinching, and it has social-need implications.
Another important aspect relates to changes to the work capabilities assessment, which is part of the employment support allowance. I have spent a lot of time looking at it; it is barely bedded down, and DWP is talking about changes. It envisages a significant increase in disallowances and appeals. We think that it is likely to hit people who have mental-health problems and those who have lower level — but nonetheless significant and, perhaps, debilitating — physical health problems, in particular. Those people will be moved to jobseeker’s allowance, and that is the inevitable corollary of coming off employment support allowance. Subsequently, they will be moved into the new conditionality-type regime about looking for work.
We wonder about those provisions on two fronts. First, the Department for Employment and Learning and the Social Security Agency have done some work to gear themselves up to work with people with mental-health problems, but they are still a long way short of recognising fully the extent of the work needed to be done for those people. Many mental-health illnesses have a fluctuating and unpredictable nature, and the challenge to get that group of people into work is quite formidable.
Secondly, it is not just a matter of getting people into work, is it about how they retain work. The White Paper and the Bill do not really address the significant issue, which is not just finding work for people, but ensuring that that work is sustainable, so that people do not go from benefits to short-term work and back on to benefits, with all the difficulties of adjusting to work and then adjusting to being out of work again. That is a major concern.
The extent of the creeping conditionality has been raised. Mind, Rethink, the Sainsbury Centre for Mental Health and the Royal College of Psychiatrists issued a joint statement in which they highlighted the danger of a compulsion-and-sanctions based approach to the matter. While the Government say that they want to encourage people into work, there is a stick-and-carrot approach, and there is a real concern, not only for people with mental-health problems, but for others, about the sanctions-based approach to encouraging people into work at a time of economic downturn.
Another element of the Bill is the linking of drug treatment to receipt of benefit for crack cocaine and heroine addicts. Interestingly, powers have been taken in the Bill to extend that to people with alcohol problems, although, in the short term, I understand, there is no desire to introduce it for alcohol issues.
We are not a great fan of what I call social engineering in the benefits system. We do not social engineer people’s behaviour in the tax system, so we wonder why it should be done in the benefit system. In practical terms, there are fewer than 260 registered addicts in Northern Ireland. We understand that there may be other people who are not registered and who have fallen through the system, but we are talking about a very small number of people. In practice, we think that the approach to drug rehabilitation should be about recovery and health, and not about the idea of using the benefit system to try to compel people to seek treatment. People with serious addiction problems will not change their behaviour about benefits. In reality, they will become ever more desperate to find money elsewhere, and that is where they will focus their attention. We do not think that those provisions will work and, therefore, we do not think that they make a great deal of sense.
The Government propose a work-for-your-benefit scheme. They do not call it workfare, which is the American system. However, it is mandatory unpaid work experience. If anyone can tell me the difference between mandatory unpaid work experience and the workfare system, I would be delighted to know it. It sounds like the same thing to me. However, that may reflect my cynicism and my jaundiced view of life.
We would need to have a lot more detail about the scheme. How do people avoid the stigma of being landed in mandatory unpaid work experience after they have been unemployed for two years? In effect, at the current jobseeker allowance rate, they would be working for £1·73 an hour for a 35-hour week. How would job displacement be avoided, particularly at a time of economic downturn? What would happen to lone parents, childcare provision, and the payments that would be available for lone parents if they have to go down that route? We need to know a lot more detail before we can comment meaningfully on the effectiveness of the proposal.
There are two main social fund changes. One is to outsource the loans scheme to external providers, which seems to mean credit unions. It is strange, because there is no national credit-union infrastructure in Britain. Arguably, in Northern Ireland, we are closer to that, because we have a cross-community set of credit-union institutions. Our preliminary soundings indicate that there is no sense of enthusiasm among credit unions to embrace the social fund and start providing loans, particularly given that the Government have ruled out — quite rightly — the idea of charging interest of those loans.
That leaves the Government stating that there will be another social fund review, but they still have ambitions to do something with those proposals that have taken those powers. We do not see that working in practice and wonder how it will work in effect.
The second part is a proposal to pay community-care grants to third parties, which, I understand, is intended to allow the Department in Britain to enter into block-purchase arrangements with providers of white goods, furniture and so on, in order to save money. We have two issues with that. First, the idea that, for example, people with disabilities should be able to control their budgets and services goes against the grain of other provisions in the Bill. Secondly, the lack of review powers for the social fund inspector — in order to safeguard against wrong or capricious decisions — is a significant gap in that proposal.
The final issue concerns the rights of people with disabilities to control and spend money on the services that they receive. It is almost impossible to disagree with that in principle, particularly when an individual can choose whether to embrace it. However, that really falls back on the introduction of the direct payments scheme in Northern Ireland.
We remember how that scheme was introduced about 10 years ago. It was first introduced in Britain and then foisted on social services in Northern Ireland without any extra resources being provided — the social services were told to implement it by the beginning of the next financial year, about nine months later. Nobody was prepared for that; there was no consultation. The scheme was introduced, and there was virtually no take-up. That has changed slightly — I am not familiar with the present take-up figures — but there is still no significant take-up.
If these proposals are to be implemented, they must be implemented properly, with resources to support organisations that can assist people with disabilities, if they choose to take up the scheme, to manage the process.
The scheme must be publicised and introduced in a structured and proper process; not simply enacted through legislation that lands it on the authorities, who are told to go ahead and set it up. The scheme will not work if that is how it is brought in. If it is going to be introduced in Northern Ireland, there must be interdepartmental co-ordination among the Department of Health, Social Services and Public Safety and others, together with resources that will ensure that the scheme works in practice.
I will stop there. I have a short conclusion, but I will now hand over to Laura.
The Chairperson:
Will you keep that brief, because time is of the essence. I understand that there is a lot of detail involved in the Welfare Reform Bill and that there are also a lot of matters that members wish to raise. The Committee is not completely restricted for time, but it must try to keep the discussion as precise as possible.
Before members hear from Laura, you have just presented the outline of the legislation from the Law Centre’s point of view. I know that the Law Centre has been involved in the Welfare Reform Bill in Britain. Have the details that you have outlined to the Committee been forwarded to the Minister?
Mr Allamby:
The Committee has our briefing.
The Chairperson:
I know that the Committee has your briefing, but has the Law Centre forwarded it to the Minister?
Mr Allamby:
Not yet, but we will.
Ms Niwa (The Law Centre (NI)):
I will be as quick as I can; I appreciate the lack of time.
Les has given a very broad overview; I will pick up on a couple of issues, particularly the issue of lone parents, about which we have previously spoken. We have identified that as being an issue that is specific to Northern Ireland. There is particular concern in relation to childcare issues here.
Much of the work in the Bill that has been commented on that is to do with conditionality and with lone parents is a result of Prof Paul Gregg’s review, which recommended that conditionality should be based on encouragement, co-operation and co-ownership. The Gregg Review also recognised that sometimes conditionality must be stepped up when people consistently failed to engage effectively with the support regime. We feel that the Bill takes too much of a slant on conditionality, to the detriment of the encouragement, co-operation and co-ownership that Gregg pointed out, particularly in relation to the imposition of sanctions on lone parents.
We are very concerned by the proposals in the Bill and the White Paper that require lone parents with children aged under seven to actively seek work as a condition of receiving jobseekers allowance. We are aware that a recent change to the lone-parents regulations has moved that condition to lone parents with children aged under 12. Those regulations are in the process of coming into force, and we believe it is a step too far to recommend further changes when we have not seen the impact of what has happened as a result of the current changes in respect of lone parents with children under 12. Those changes have not been evaluated, and we feel that it would be prudent and important to wait for that to happen before further reductions were made.
The Department spoke to the Social Security Advisory Committee (SSAC) at its December meeting, and it reported that the current levels of childcare provision are manageable for the reductions for children under 12 years of age, but that provision does not exist to cover the further downfall for children under 10 and the proposals in the Welfare Reform Bill for children under seven. At that meeting, the Department stated that it was not confident that, by October 2009, Northern Ireland would be ready for the changes in childcare provision for lone parents with children aged 10 and under. Despite that, such a Bill will introduce at a further step that will apply to children aged seven and under.
We foresee a number of difficulties in introducing legislative powers for that purpose in Northern Ireland, because the childcare infrastructure that is required to underpin the proposals is simply not in place. As the Committee will know, there is no lead Department that is responsible for developing the strategy and the appropriate provision.
The current economic climate may make it even more difficult for lone parents to secure jobs that allow them to combine their work and family life. If lone parents are exposed to the risks of benefits sanctions, that will have the potential to adversely impact on child poverty. Although we accept that benefit rules must, to some degree, be backed up by sanctions, every extension of conditionality should only be agreed after the likely impact of benefit withdrawal on child poverty and social exclusion has been taken into account to ensure that any potentially negative impact is kept to a minimum. We urge that that happens here.
Recent research on childcare provision in Northern Ireland has found that it remains woefully inadequate. Surveys have found that nearly a quarter of employed mothers experienced childcare problems that restricted the hours that they worked. GingerbreadNI estimates that 30,000 extra childcare places would have to be provided in Northern Ireland to support the delivery of the UK Government’s target to have 70% of lone parents in employment by 2010. However, between 2002 and 2007, the overall number of day care places in Northern Ireland has actually fallen.
In England and Wales, greater strides have been made towards developing comprehensive, wraparound childcare than in Northern Ireland. In recent years, significant investment has been made in England, and we have some way to go to improve the access to high-quality, affordable childcare. As we know, the Government structures in Northern Ireland are very different to those in the rest of the UK, particularly in the area of service support and delivery. Local authorities in Northern Ireland are under no obligation to assess or meet local childcare needs as are required by the Childcare Act 2006, which applies to England and Wales.
We are encouraged by the fact that an interdepartmental group has been established. We understand that a paper on childcare provision is in preparation. We will certainly look at that with interest, and we will be able to provide more comment on that when we receive it. However, particularly in Northern Ireland, the issue must be treated with caution.
To move forward with the Westminster Bill and White Paper as they stand would be to open up avenues that would particularly impact on child poverty, which is a key area in which many of the Departments and Committees in Northern Ireland are taking an interest. The Department for Social Development must set out its own procedures and policies before moving forward. A full debate on the practical consequences for Northern Ireland should take place.
The Chairperson:
Laura, which Department takes the lead on childcare?
Ms Niwa:
No Department does; responsibility is split across four Departments: the Department of Health, Social Services and Public Safety, the Department for Employment and Learning, the Department for Social Development and the Department of Education.
The Chairperson:
Which Department takes the lead in the review?
Ms Niwa:
No Department takes the lead at present.
The Chairperson:
Is no Department talking about it?
Mr Allamby:
OFMDFM is in the lead because it has responsibility for the Executive’s targets on child poverty. There is no strategy with a lead Department.
The Chairperson:
Surely that needs to be rectified.
Mr Allamby:
OFMDFM’s work is to try to move to a situation in which someone takes responsibility.
We want the Department for Social Development to set out its stall on its approach to the White Paper and the Westminster Welfare Reform Bill. We think that it should reference how those will be tailored to the particular needs and circumstances of Northern Ireland. I know that that brings us into the parity debate, which is why we have written a paper on parity.
Frankly, much of what is contained in the Bill does not have to apply to Northern Ireland in the same way, without necessarily having to get into the concerns about parity of provision. It does have to apply in some parts, but much of the current Bill could be tailored for Northern Ireland to recognise our particular circumstances.
The Chairperson:
The Committee values the Law Centre’s perspective on the matter. The majority of members feel that parity is to the benefit of Northern Ireland. Having said that, our role is one of scrutiny and challenge, and, in that spirit, we are interested to learn more about how the Bill could be recast for a Northern Ireland context without breaking parity. Will you briefly set out the aspects of the Bill that could be implemented differently in Northern Ireland without breaking parity?
Mr Allamby:
I will give some examples. Northern Ireland has its own strategy for dealing with drug rehabilitation. Therefore, one could legitimately say that social security provisions should look to the Northern Ireland drug strategy and not simply to the strategy in Britain, which is slightly different in emphasis. There is no need to implement a social security provision in line with Britain if the financial implications of not doing so are nugatory.
Childcare is another example. Where we have a very different set of childcare arrangements in Northern Ireland, social security provisions need to be tailored to those arrangements. Therefore, part of devolution involves the recognition that there are areas in which we differ in broader policy terms. Much of what is contained in the Bill impacts on all sorts of other policy areas, and that should be the prism through which one looks. Those are just two examples.
Our organisation recognises some of the financial advantages of parity, and they are very substantial. By the same token, we understand that there are different contribution conditions for benefits: for example, the removal of the dependants’ additions would have a very different impact with regard to parity, because one is then moving into the level of benefit paid, and that is a very different situation. Therefore, it is about making that distinction. There is breathing space in the Bill to do things that make sense for Northern Ireland.
Ms Ní Chuilín:
If the Bill were implemented, would it be in breach of section 75, in relation to lone parents in particular?
Mr Allamby:
The issue is that some parts of the Bill would have an adverse effect on lone parents, particularly as regards compulsion, conditionality and possible reduction of benefit. From a departmental point of view, the question then is whether one can justify the basis for those adverse impacts objectively. I do not think that anybody will argue that those will not have an adverse impact. Then one gets into the legal issue about whether one can objectively justify doing it, and on what basis one is doing it. It becomes much harder to justify in a recession, and one issue about the Bill is that it does not seem to have passed through recession proofing, which is one of its weaknesses. The Government argue that the recession is temporary, but that remains to be seen.
Ms Ní Chuilín:
What I am trying to extract is there is no obligation. It is not like local councils in Britain: local councils here do not provide childcare places, so that is a gap. Even under new RPA arrangements, childcare is not being transferred: that is a gap. Lone parents who have childcare needs, with no Government provision, are going to be forced to work, and, if they do not work, the whole family will be penalised: that is a gap. I am asking you to say whether, if the Bill is passed, it have an adverse impact on lone parents. Will they experience equality?
Mr Allamby:
You do not have to work too hard to extract from me that it will have an adverse impact and that that has section 75 implications that need to be addressed.
Ms Ní Chuilín:
In that case, could breaking parity be justified? It is not a like for like situation.
Mr Allamby:
That would lead us into a more nuanced argument about whether section 75 protections are a justification for breaking parity. The argument is more political than legal. I would not put my house on winning a legal argument in court, but an argument undoubtedly exists.
Mr Brady:
Thank you for your presentation. Les, I am sure that you share my jaundiced views and my cynicism when it comes to social security. I have a couple of points to make. The issue of parity has already been touched on. The concept of parity is about implementing like for like. We have two Departments to look after social security and employment, so we cannot have a like-for- like situation in that sense. That is an area that could be examined without necessarily affecting the block grant.
The second point that I want to make is about tax credits for lone parents. If the Welfare Reform Bill is going to force lone parents into work, then childcare provision has to be looked at, as well as the childcare aspect of tax credits. That was designed to help lone parents get back into work, which has not happened. A few years ago, a Welfare Rights Centre survey showed that Newry and Mourne had some of the worst childcare provision in western Europe.
You touched on the old issue of capability for work. A personal capability assessment does not deal, in any shape or form, with an individual’s ability to work — it measures whether an individual can sit, stand, bend, kneel and so on. That issue must be addressed in any Welfare Reform Bill.
You also mentioned front line staff and the training that they will need in order to deal with people who have serious mental-health problems. The Minister has been asked about that, but no satisfactory answer has been given as to the level of training that front line staff will receive, particularly in employment and learning, and especially when it comes to interviewing people and in the whole back-to-work concept.
Mr Allamby:
The transition to work and childcare provision are crucial issues. Let us assume that a lone parent has access to childcare; it is likely to be financed through the tax credit system. The difficulty is that if it takes three or four weeks for a lone parent to receive tax credits, where does that person find the money in the interim if a childcare organisation asks to be paid upfront on a weekly basis?
There are issues around transitions to work: if a person is to be paid monthly, then benefits are not paid at the same time, and the person would have to wait for their money. If anyone around this table were told that they would be experiencing a short drop in income, but that it would be recouped in a month’s time, we could probably manage; we would either have savings or access to other funds. People who have been on benefits for some time and have no savings would not have the luxury of being able to find money for the next three or four weeks until the next tax credit comes through. Also, they might not be able to ask the childcare provider to wait a month to get paid, or even another month if the tax credit does not come through.
That is the reality one faces when it comes to moving people from unemployment into work. There are other issues to be addressed if one is serious about moving people back into work effectively. The Department for Work and Pensions is doing some work on that, but that is still at an early stage. Some parts of that work, including the Bill, are moving ahead. In some senses, we are running before we can walk.
Mr F McCann:
I want to pick up on the issue that Mickey raised. Will training sessions for client advisers equip them to deal with people with mental-health illnesses?
Mr Allamby:
I am not fully conversant with what DEL is doing in respect of training. Wearing my other hat as a member of the Social Security Advisory Committee, I hope that we will find out a bit more about that as part of our visit. I know that DEL has put some training in place.
The focus is moving away from the Pathways to Work pilot approach, which tended to help people who were relatively close to getting back to work, to a different stage whereby client advisers help people who have been out of the labour market for a long period of time. That poses different challenges from those arising from working with people who have been out of work for a relatively short time. I am not sure whether client advisors are geared up for that yet; I do not know enough about the level of the training that has been provided. My sense is that DEL is not fully aware of how much of a challenge it will be.
Mr F McCann:
In the briefing paper, it states that the purpose of the Welfare Reform Bill is to simplify the benefits system. What is your reaction to that?
Mr Allamby:
A single working-age benefit would probably simplify the social security system, depending on how it is implemented. This Bill does not simplify the social security system; in fact, the system has become more and more complex, because one has to try to work out where the conditionality is.
The focus is moving to partners of people who are unemployed, because they will have conditionality attached to their entitlement to benefit, as will lone parents, and certain people on employment support allowance in certain circumstances. That has become much more complex. Therefore, I do not think this Bill simplifies the social security system.
Mr F McCann:
In the past, the system has not recognised people who are either long-term unemployed, or unemployed and unable to get a job, and who do community work instead. Are there any proposals for the new system to recognise the work that such people do?
Mr Allamby:
Nothing in the Bill addresses voluntary commitments or other commitments. The benefits system has done one or two things at the margins to encourage volunteering, but there is no equivalent of the old Action for Community Employment (ACE) schemes for people to join. There is nothing like that on the horizon. The Bill is about gearing up training to get people back into work. I cannot see an ACE-type scheme on the horizon, and I do not think that is what envisaged with this “workfare-type arrangement”.
Ms Lo:
I understand that the principle of the Bill is to get a large number of people who are economically inactive back to work. That seems so harsh — it is like waving a big stick at people. A lot of people want to go to work. It is not that they do not want a job: most people want a job, but cannot get one. Perhaps we are doing this in the wrong way.
You mentioned the issue of training. We need to put the emphasis on people gaining qualifications, so that they can get a job. We need to break down barriers so that the unemployed can get a job. We should not be pushing them to get a job when they cannot get one, particularly during an economic downturn. There are not enough jobs. If we do that, we will simply be disadvantaging already disadvantaged groups.
Mr Allamby:
I absolutely agree. The Department recently commissioned research by the Joseph Rowntree Foundation, which found that lone parents who get back to work end up being materially and financially better off and, in some cases, quite significantly so. The downside of that is that their health and social well-being is often affected. Therefore, this is also a quality of life issue. It is not simply about finance.
There is a notion that work is good for you: by and large, work is good for you. Good work is good for you. However, poorly paid work, and long and unsocial hours are not necessarily good for you. Getting people into work is not just about getting them a job, it is about the type of work that they do, how secure it is, and how well they are treated. Therefore, we need to look at that, and not just at getting people into work. The quality of the work is also important.
The Chairperson:
Thank you very much. I remind members that the Department will shortly be updating the Committee on the progress of the Bill at Westminster. I believe that the intention is for that to happen in the autumn, and it should be part of our forward work programme, to which we will come soon.
We will now move straight into our next briefing, which is from Sir Richard Tilt, chairman of the Social Security Advisory Committee (SSAC), on the role of the SSAC and on the Welfare Reform Bill. Members will find the Committee Clerk’s cover note and a copy of the SSAC briefing paper in their information packs. I assume that there will be a degree of overlap between this part of the session and the previous one. Sir Richard, some questions might be repeated, so, I hope that you will not get bored. We have special tea bags. [Laughter.] That is a special joke that we have, but we will not go into that today. We will explain that at another meeting.
Ms Lo:
I shall take a new cup of tea. [Laughter.]
The Chairperson:
Sir Richard, you are very welcome, as are SSAC members who are in the public gallery. We will ask you to go straight into your briefing, which will, of course, be followed by questions, and, hopefully, good answers.
Sir Richard Tilt (Social Security Advisory Committee):
Thank you for your welcome. Let me check timing with you. How are we doing for time?
The Chairperson:
You just keep going. I will not cut you off in your prime, but it will be close to it.
Sir Richard Tilt:
Les and Laura covered quite a lot of stuff on the Welfare Reform Bill, and I will not go over that. I agree with much of what they said. I need to start by saying something about the Social Security Advisory Committee.
The Chairperson:
Did you say that you agreed with most of what they said?
Sir Richard Tilt:
Well, in broad terms I am in agreement with what has been said.
The Social Security Advisory Committee is currently visiting Northern Ireland. We visit as a Committee every two or three years in order to keep in touch with what is happening here. The SSAC is an independent statutory body, which has been in place for about 30 years. Its function is to provide advice to the Secretary of State on matters of social security, and it has a function to do the same for Northern Ireland, in the sense that there could be different social security legislation.
That function is discharged in two ways; and uniquely, I think, as an advisory body, we have a statutory position in respect of secondary legislation ― that is, regulations. Therefore, if the Government wishes to lay regulations under social security primary legislation, it has to consult the Committee about those regulations. Much of that consultation takes place on an informal basis, whereby we deal directly with officials, and the regulations are often amended in some way as a result of those discussions.
However, there remains what is known as the formal referral procedure, such that if we feel that we have significant concerns about some regulations, we ask for those to be formally referred to us. We then conduct a public consultation on those regulations and give the Secretary of State our formal position in respect of those regulations, and he has statutorily to publish those comments from us together with his own response. That, which is known as a report from the Social Security Advisory Committee, is used, I think, quite extensively when regulations are discussed in the House of Commons and the House of Lords. It is, therefore, quite a useful piece of information for Members of Parliament.
We also have a remit to provide advice to the Secretary of State on any social security matter on which we wish to do so. Therefore, we do, from time to time, publish papers on particular issues. One such issue in the past year or two has been, for instance, on the use of sanctions ― and there are many others like that. All of that can be found on our website if members of this Committee are interested in those.
I will give the Committee a list of formal referrals that we have dealt with during the past year, just to give members a flavour of the sort of concerns that we have and, hence, why we have taken the step of formal referral and reporting to the Secretary of State.
The first relates to the proposals to move lone parents from income support to jobseeker’s allowance. As you have heard the detail of that from the previous two witnesses, I will not go through it all: suffice it to say that the SSAC’s recommendation is that the Secretary of State should not proceed with those proposals. We have serious concerns about them; principally, around the question that parents, in trying to do their best for their children, will not always be satisfied that the childcare that is available is acceptable. It is about allowing parents to have that choice. In practice, of course, well over half of lone parents work. It is not a huge issue. However, a significant number of parents choose not to work for various reasons; many of which, we believe, relate to childcare.
We also made a particular comment with regard to Northern Ireland, because we are aware that the childcare infrastructure here is significantly less well developed than in the rest of the UK. Therefore, we have particular concerns about Northern Ireland and general concerns about the policy of moving lone parents in that way, with increased conditionality, to jobseeker’s allowance. Shortly, we will offer advice to the Secretary of State that he might consider not proceeding with the next phase in October 2009.
Again, part of that stems from our uncertainty about whether childcare arrangements are as good in GB as they ought to be. It also relates to the recession: the situation is becoming increasingly difficult. There is emerging evidence that the rate of lone parents in employment is beginning to fall because of the recession. We need to test that out. All of those issues seem to us to be reasons why it might be sensible to hold fire — generally, across the whole of the UK. There are further and, if you like, stronger reasons because of the lack of availability of childcare. That remains a problem.
Secondly, we have reported on Flexible New Deal in GB, which is the sweeping up of all existing New Deal arrangements for getting people into work with conditionality. It provides a considerable role for the private sector in offering job placements. We have expressed a great deal of concern about that. You might want to look at our report on the Flexible New Deal, because issues, although they relate to a particular set of regulations, go beyond that. Some of our comments about the extent to which that can be made to work during a recession are pertinent.
Thirdly, we have reported on what is known in the trade as “periodicity” — the Department and the agency’s move to pay all benefits two weeks in arrears and tied to a specific date that is linked to a person’s National Insurance number. That is going ahead and is due to start around now. Although the policy is probably quite good, we have concerns about the transition arrangements that are in place as regards the loans that are available to people. The Secretary of State accepted our recommendations. As a result, the loan position has been improved.
Fourthly, we are presently out to consultation on mortgage interest support. The Government have introduced specific emergency measures to deal with the current recession and possible housing repossessions, which provide for increasing the capital amount and reducing the waiting time before someone can claim mortgage interest support. However, as part of that package, they are introducing a two-year time limit. We have concerns about that limit, although we have not yet fully bottomed what they mean by it. We are out to consultation on the matter. The two-year time limit causes concern; not the other parts of the package, which are pretty sensible.
The Chairperson:
Recently, during the past few weeks, statutory rules were passed on a number of the issues that you have spoken about.
Sir Richard Tilt:
We have reported on a small issue — small, because the number of people affected by it is not large — which is the capping of the local housing allowance at the five-bedroom rate. It relates to a number of cases, which occurred mostly in the London area, where huge sums —
The Chairperson:
We are not guilty of that one. [Laughter.]
Sir Richard Tilt:
No. We do not think that what was proposed was sensible.
During the year, we have also reported on the Government’s proposals, which have now come in, for reducing the backdating arrangements for claiming housing benefit and council tax benefit. We thought that those, in particular, were disadvantageous to older people, especially those over 70 years of age, who had had a right to claim up to 12 months back. The Government intended to reduce that to three months, but on the basis of our recommendations, that period has been set at six months. They intend to move to three months next year. We believe that quite a lot of older people on pension credit in particular will lose out as a result of that.
That is the business as it is at the moment. I do not want to take up time talking. As some of you will know, I am the Social Fund Commissioner for GB and for Northern Ireland. Les covered the social fund issues in relation to the Welfare Reform Bill, but I am happy to take any questions on social fund issues.
The Chairperson:
It seems that the Committee should keep in with you, because the Secretary of State and others have paid attention to the points that you have put to them. It would be a good thing to meet you every week to get our points across to the Government. [Laughter.]
I thank you for the reports and for the guidance that the Social Security Advisory Committee has provided on social security matters. I want to put on record that our Committee has found your Committee’s perspective to be invaluable in our consideration of those matters.
Sir Richard Tilt:
Thank you.
The Chairperson:
Does the SSAC advise the Department for Work and Pensions on its obligation to parity?
Sir Richard Tilt:
No. We are well aware of the current parity policy and its history. As Les said, we are conscious of the financial benefits that accrue to Northern Ireland through the parity arrangements. It is not strictly an issue for us. We have not made any recommendations in my time about significant policy departures in Northern Ireland that would breach parity. As Les was hinting, there may be some scope, when policies are being phased in, to do that phasing differently in Northern Ireland. I am not in a position to say whether or not that is a breach of parity, but no doubt your officials will give you advice on that. I do not think that it represents a major breach of parity.
The Chairperson:
You will be aware that the Department for Social Development wants to enhance telephony use here for benefit claimants. What is your Committee’s view on that?
Sir Richard Tilt:
We have always accepted that the spread of telephony for dealing with social security claims is a natural step. All of us deal with things on the telephone now that we did not do 10, 15 or 20 years ago. Insurance is one of the most obvious examples; most insurance deals are now done over the telephone and the application is taken over the telephone. That is a principle that can be applied perfectly well to social security. However, my Committee has always said that there are some important principles to remember when introducing telephony. The first is to ensure that people who are vulnerable and short of money do not have to pay for the telephone call. It has proved extremely difficult to deliver that. The Department for Work and Pensions has signed up to the principle of people not paying, but getting the telephony and mechanisms to deliver that is quite difficult.
Mobile phones are a huge complication in all of that, because there are significantly higher tariffs on mobile phones, and a lot of people who are on social security use mobile phones; they no longer have landlines. There are, therefore, real technical problems. However, we think that telephony is bound to be the future for social security, but that requires good telephone systems and messaging, and enough staff to answer calls — it is no good putting in telephone systems if people cannot get through.
I just give the example of the social fund, although delivery of the social fund in Northern Ireland has remained at a pretty good level compared with that in GB. GB agencies went significantly across to contact centres and telephones, but they did not have enough people to answer the telephones. Therefore, two or three years ago in England, if you were trying to get a crisis loan, you simply could not get through on the telephone. People were, literally, spending days and days trying to get through. That has been much improved by putting in many more staff. Staff numbers had to be doubled, perhaps, to meet the need.
I am sure that the Social Security Agency here will be moving in that direction. I would be very surprised if it was not. The key thing is for the agency to make sure that it has enough staff. There is quite a lot to be learned from the experience in GB that would be very useful to the agency here.
The Chairperson:
It is almost as difficult to get an appointment with the Health Service at the minute. I had to wait nearly a week to get one. You would be standing in a queue for a long time there, too.
Mr Brady:
Thank you very much for the presentation. I would be interested in your views, as the Social Fund Commissioner, on the proposed changes to the social fund, particularly in relation to third parties paying. I know that the issue about interest seems to have been resolved for the present. Secondly, I know that you and your predecessor were interested in the social fund uptake, particularly in relation to second-stage reviews. In our area, there was a very low uptake with regard to the second stage. Do you think that that has improved?
Sir Richard Tilt:
I will answer your second question first, Mickey. The uptake has improved slightly. I think that it has been driven by the recession as much as anything else, but the workload in the office here in Belfast has probably almost doubled in the past 12 months. However, a lot of that is, I think, to do with the recession.
With regard to the other proposed changes, I do not have very strong feelings about the contracting out of loans. I think that the problem with that is that there is not a natural, national way of doing it. As Les Allamby said, you might be better placed to do it here than in GB. Credit unions are going to administer loans only if they can charge interest or if someone pays them to do it, and do not see much point in doing that. The Government does it at the moment, and that seems to me to be a reasonable way of doing it. However, if you want to get other financial institutions involved, then someone has to pay for that in one way or another — either through the users or through interest — and I do not think that it is right that people on means-tested benefits should be paying interest on social loans. So, it is quite difficult.
Introducing financial advice as part of the package is a good idea, and I would support that. Providing advances to people coming onto benefits, rather than having them claim a crisis loan, is a good suggestion, and I hope that that comes in relatively quickly. As regards the white goods scheme, on the whole, I support the purchase of white goods, only because it will release some money. It will save a bit of money, and that money can be reinvested in community-care grants. The community-care grants system is seriously underfunded.
Mr Brady:
I have spoken to local credit unions about the proposals that they may become the involved third parties. It is very much as you said: they will not do it for free. They need to be reimbursed, because they are sorely pressed.
Sir Richard Tilt:
That is right, and the reimbursement usually involves interest charges of about 25%.
The Chairperson:
What is the Social Security Advisory Committee’s view on the aspects control of the welfare state going to third-party organisations? Would that be problematic or advantageous?
Sir Richard Tilt:
I cannot outline an overall committee view on that issue, because there are a range of opinions therein. Insofar as we have discussed it, we have no objection, in principle, to using the private sector. We are concerned about the payment conditions in the contract and the extent to which they will encourage bad practice: I mean the practices often referred to as “parking and creaming”. The private sector may be more interested in —
The Chairperson:
It would never be guilty of creaming. [Laughter.]
Sir Richard Tilt:
The private sector may be interested in dealing with some customers more than others. That leaves vulnerable people and those who are less easy to place with poor service. We want to protect those groups. However, we have no objection, in principle, to contracting out.
The Chairperson:
Do you agree that the measures that relate to drug users will be effective?
Sir Richard Tilt:
No; we do not agree. You deal with much smaller numbers here, but even in GB it will not work. The proposal is that people will be sanctioned if they do not attend a first meeting with a provider to discuss their problems. It is not about joining a drug-treatment programme. We do not believe that that approach will be effective, because it is too cumbersome and bureaucratic to try to get a few people involved.
In my own experience of dealing with drug users, it is extraordinarily difficult to motivate people to come off drugs. Some people manage to do it, but they will not be greatly encouraged by a one- or two-week benefit sanction — that is small beer. Serious drug users spend a large amount of money and will not be hugely influenced by a one- or two-week benefits sanction.
The Chairperson:
Thank you, Sir Richard. I remind members that the Committee will receive a briefing from the Department before the summer recess on the Bill’s progress in Westminster. A Northern Ireland version of the Bill is expected to be introduced to the Assembly — possibly under accelerated passage — in the autumn. Members should carefully consider their views on any aspects of the Bill with which they have difficulties. I thank you again, Sir Richard, and members of your committee, for attending today.
Members who want to ask questions but have insufficient time during the meeting can relay those questions — including those about briefing notes — to the Committee Clerk, who will ensure that they are answered. Questions will definitely be forwarded, and all relevant information will be sought, because the issue is important.