Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 20 - 39)



  20. Will you make absolutely sure that how those posts are created and how they work makes sense in terms of what is already a statutory requirement for Early Years Partnerships and the Children's Information Services, because at the moment they are saying, "Here we are. We are the people responsible for providing advice and information on childcare", and suddenly along comes a new childcare co-ordinator in a different context? How are they supposed to fit together?
  (Mr Smith) The answer is yes, I already have done and I will raise a report on precisely this issue.

  21. We have already talked about the area initiatives and Sure Start and the nurseries initiative and things of that kind and they are generally wonderful, but the overwhelming majority of children in poverty, including lone parents, do not live in those areas of deprivation. What is the strategy for making sure that we reach those people in poverty and out of work who are not in the 20 per cent most deprived areas?
  (Mr Smith) Because we operate a national service and whilst some of the area based initiatives that are concentrating on localities where there are particular concentrations of deprivation will not be eligible for those, there are the other national programmes which people are eligible for and we expect Jobcentre Plus to be offering a service to everybody—and we have just been talking about childcare—just as our Early Years unit will be gathering information and monitoring progress in every community in the country.

  22. The problem, to take the childcare example, is that the actual local authority provision of childcare outside the statutory places for three- to four-year olds is declining, so what you have got is very positive measures in the most deprived areas but in other areas we are going backwards in some respects (not in all respects), to take the example of the provision of affordable childcare.
  (Mr Smith) Just going back to what I was saying about childcare partnership managers, I would expect their coverage to include the whole of the country.

Mrs Humble

  23. I have to say in my dealings with lone parents, certainly in my constituency, there is not a shortage of affordable childcare for young children. The real difficulty is for the older group of children, the seven to 13 or 14-year olds. There are many lone parents who delay going back to work until their children reach that age so they are cushioned when they first start their infant classes, and then they find that they cannot take full time employment or even part-time employment spread throughout the whole year because they cannot cope during the long school holidays. Can I urge you to look at that age range of children when you are having your dealings with the Department for Education and Skills because it is parents with children of that age who often find real barriers to work because there is nobody to look after their children?
  (Mr Smith) I will certainly take the point on board.

Miss Begg

  24. I was very pleased that the rules on therapeutic earnings were changed. The old rules were very rigid, particularly for people with physical disabilities and a chronic condition where their doctor had to say that the work was therapeutic. It might be therapeutic psychologically but that was not why they were getting incapacity benefit. With that caveat, it was a very welcome change. However, the rules that have come in are only allowing permitted work for 26 weeks rather than indefinitely as it was under the old therapeutic earnings rule. That 26 weeks must have been up last week because it was introduced in April 2002. I am just wondering what is it that your decision makers are going to require as proof that they can extend their permitted work for the next 26 weeks that would allow anyone who is on the therapeutic earnings work to keep the higher level of earnings?
  (Mr Smith) I am grateful for your welcome for the reform. There are three groups we can talk about here. Universally, for earnings of no more than £20 a week, people have got the right to do that anyway. On the group that you are referring to, for those working less than 16 hours a week on average, with earnings no more than £67.50, they can not only work for that first 26-week period which you described but that period can be extended for a further 26 weeks if a person is working with a job broker, personal adviser or disability employment adviser who agrees that it will help them move towards work of 16 hours or more a week. That option will be open for a number of people. We did also, in response to concerns that were raised by disability organisations during the consultation on the change in the rules, widen the opportunities to maintain the position of people with special needs who were supported in work by professional health or care workers and they are not subject to the time limits to which you refer, so therefore that is that third group.

  25. Is there not a danger though for those who do not fall into the category of special needs that they may ping-pong backwards and forwards between the higher rate, the £67.50, and then, after the year is up, they are not ready to take on full time work so they come back down to £20 a week which is the permitted allowance under the therapeutic earnings? They are on £20 a week for a year, they try again, they get 26 weeks at the higher rate. What decision will your decision makers make and what evidence will they need to decide whether people can move on to the higher rate or no longer qualify for the higher rate?
  (Mr Smith) I certainly expect these rules to be applied with sensitivity and for advisers and those supporting people working in this way to be making a judgment about whether they need the ongoing support in work that the professional adviser advocates, the third category to which I referred, which is not time limited, but of course, also whether they can move to work more than 16 hours a week, whether they are aware of the availability of the tax credits and whether they could, after a period of this sort of work experience, be actually better off moving to slightly more hours and to a self-sustaining job. In other words, we want these new rules to work in a more flexible way than the old rules, to be a pathway into sustained employment, where that is possible, without denying reasonable opportunities to people for whom that is not possible. We will keep all of this very closely under review and I certainly would not want to see the ping-ponging which you describe.

  26. One of my concerns is that the leap is too wide. If you are looking at the £20 therapeutic earnings, that is about four and a half hours in a job that would pay the minimum wage, but the next barrier is 16 hours. It is quite a big jump for somebody who can manage four hours, even six hours, maybe even eight hours, to then try to make that big leap to working 16 hours a week which opens up all sorts of other benefits such as the disabled person's tax credit and all of that. Are there enough links or stages for somebody who starts off being able to work four to six hours a week to be able to increase their time to ten and then move up? I am not convinced that those stages are there at the moment.
  (Mr Smith) I am not saying that the stage of moving from the £20 a week to less than 16 hours is easy for individuals. It depends very much on their circumstances and condition, of course. I think there is flexibility there. This will be closely monitored and experience will have a lot to teach us, I am sure, but I think we should be looking also at those who can move from 15 hours—remember that if somebody for a period has had up to £20 a week earnings in a few hours as you have described them, and then has done one lot of 26 weeks of up to 16 hours, and has then done another 26 weeks, so that they have now been a year working at close to 16 hours, it is realistic at least to explore with them the possibility of that becoming 20 hours and then they are out of the benefit. I am not saying that is going to be the case for everybody but it would be wrong not to explore that opportunity.

  27. Is it still too early to judge whether the new rules are actually working and are encouraging more disabled people to test out working without fear of losing out?
  (Mr Smith) I think it probably is a little bit too early but under the old system something like between 1 and 2 per cent of people receiving incapacity benefit were on therapeutic earnings. The original estimates that were being made for this new system were that we might get something like 2 to 4 per cent on it. It is very early days in terms of the numbers coming through the system. As I say, we will need to monitor it closely. I have not had any reports of lots of complaints or problems about it.[2]

Mr Dismore

  28. Can I raise a couple of very small supplementaries in relation to this? In relation to the change from April 2002 to April 2003, I can illustrate that again by a constituency example: Miss Durfield, who is 56 years of age, works in a charity shop for 15 hours a week and earns at the moment £61.50. She is worrying herself sick, even sicker beyond her disabilities, because she thinks she is going to lose her job next April because she will not be able to continue within these rules, and if she does that it will obviously have quite severe consequences for her and it would actually have entirely the opposite effect of what the whole thing is about. Is there any prospect of extending the transitional arrangements for people already in receipt of the old system, beyond April 2003, for people like her because otherwise effectively she is going to become unemployed at the age of 56 and probably unemployable for the future despite the fact that she only has a job which is feasible by the scheme?
  (Mr Smith) I will reflect further on that if I may.

Ms Buck

  29. Secretary of State, I very much appreciate the fact that you were at a meeting last week when we were able to discuss in detail the issues on housing benefit. For the benefit of the Committee I think it would help to outline briefly some of the aspects of the reform that you are planning to introduce into the private rented sector. Can I ask you one particular question to start off with? As you are aware, I believe now that seven out of ten private sector tenants making an application for housing benefit will find part of their rent is not covered by housing benefit. In your statement you assured us that nobody would be worse off as a result of flat rate allowances. Does that mean that the "no worse off" comparison is taking as a standard point the fact that on average private sector tenants have a £19 a week shortfall between their housing benefit and their rent?
  (Mr Smith) It certainly is the case that no-one will be worse off in the pathfinder areas and the reason is because we are taking the reference rent level as the level for the standard allowance and also because where there are discretionary exceptions we are allowing those discretionary extra payments to be made as well. The beneficiaries will not only be those whose present rent is below the reference rent level. There will also be beneficiaries from those who are paying above the reference rent level but who are restricted to less than the reference rent level and they will not be paying as much extra as they are at the moment because of the difference between where they have been restricted and the reference rent level and it is on that basis that we can be sure that no-one will lose and indeed that around half will gain.

  30. On the pilot areas that you announced last week can you tell us whether the Department has satisfied itself that there is accommodation available at rents on or below the reference rent level, because again, as you know, many of us are concerned that the difficulty with the reference rent is that it is simply impossible to find accommodation? Again there are regional variations but in some parts of the country accommodation is not there at or below the reference rent level.
  (Mr Smith) We needed in the selection of the pathfinder areas a critical mass of private rental cases. Those will include cases that are below the reference rent level. We also deliberately selected a range of pathfinders that would include high cost areas where you would expect that to be a particular problem but also medium and lower cost areas where it might not be so much of a problem. Of course, one of the benefits of doing a pathfinder project like this is precisely to learn what actually happens, not just hypothetically how many people you think are going to benefit but find out how many do benefit, whether it does exercise a downward pressure on rents and to what extent, whether the simplification that is involved does make people feel more secure about moving into work, and whether it does help landlords deal with what is a pretty impossible system at the moment in a more efficient and effective way. There are all sorts of reasons in principle to expect this to be a significant step forward but we do need to see them in practice.

  31. Can you tell us what the timescale is for the evaluation of the pilots and that there will not be a roll-out until there has been a proper and sustained evaluation in the pilot areas?
  (Mr Smith) I certainly would not expect a more general roll-out before 2005 and we will want an ongoing evaluation of how it is going as soon as they get under way.

  32. What would you say your success measures would be?
  (Mr Smith) I think there will be a number of success measures, first whether the system works more efficiently in terms of claims being determined more quickly; secondly, whether tenants are able to exercise a greater amount of choice, because I think putting more power and responsibility in their hands—

  33. Measured how?
  (Mr Smith) We will be interviewing the tenants themselves on their experience of the system, ditto the landlords and obviously getting the feedback from local authorities as well. Whether it has an impact on rent levels, what impact it has on the supply of adequate quality rental accommodation as well, would be two criteria, plus what I said about the benefits as far as people being readier to consider entering the labour market.

  34. And possibly also whether it has any implications for statutory homelessness issues. Would that be something that you would monitor?
  (Mr Smith) Yes, of course.

  35. I asked you last week and you may not have had an opportunity to check this for me, but can you indicate whether temporary accommodation is going to be excluded from this?
  (Mr Smith) That would be my expectation, yes.[3]

  36. You have indicated that in the long term you would be interested in seeing how a flat rate allowance works out for another ten years. I have always been very keen on the idea of a flat rate contribution for low income owner-occupiers, a means tested contribution, because, going back to the lone parents and poverty debate, there is clearly some evidence that low income home owners feel trapped by their mortgage interest relief which they do not want to lose and that is one of the barriers to returning to work. First, do you have any blue sky aspirations to roll this out to low income owner-occupiers, and then, in the social rental sector you have indicated, and I think absolutely rightly, that until there is evidence of choice within the sector in all areas of the country you would not be able to do it? Do you think as a work incentive that it does make sense first of all to extend this to social housing rents as part of the rent restructuring programme?
  (Mr Smith) In your first question about its extension, we do have to take this stage by stage. There is a soundness to the principles which underpin this which does have wider applicability. We have not said that we are looking at it in relation to owner-occupation but I see the logic of the argument you are putting forward and that is something that might make sense to consider in the future. I think the extension to social housing would need to depend on progress on rent restructuring and on how far there is already choice and more mobility within the sector. One thing we will be keen to explore as the pathfinders get under way is whether in any of these areas there might be an interest in extending it to the social housing sector and if we were able to do that in a practical way I would be keen to extend the pathfinders but we do not know that just yet. Obviously, there are a lot of mechanics to this which we have to discuss with the local authorities themselves. We have invited the 10 pathfinders to take part. We have got a conference on this next Tuesday with them, but of course we need to get regulations through and we need them to go through meeting cycles and so on to get their confirmation, so it will be some way into next year before we can get it under way. Tempting though it is to consider how the project might be extended, there is quite a challenge in getting the core job of work done and I think it is very important that this works well on the ground. That is not just a question of designing the policy right and getting the systems in place. If this is to work tenants need to be engaged with it, landlords need to be engaged with it, so there is going to be an important job of work in terms of information, education and support out on the ground in the pathfinder authorities. We want to get the core proposal tested right before we elaborate it too much.

Mr Goodman

  37. In February Frank Field introduced a Bill to remove housing benefit from unruly tenants which had previously been in the Government's Housing Green Paper. As you know, the Government is sympathetic to the aims of the Bill but it ran out of parliamentary time and the Prime Minister said in his speech to your party conference: "Anti-social tenants and their anti-social landlords who make money out of abusing Housing Benefit, while making life hell for the community, should lose their right to it." The question I am asking is, where do you go from here? Are you definitely committed to bringing in a Bill or might you, say, introduce a Green Paper on the subject? If the Government are going to introduce a Bill, what can be said about the timetable of that Bill and would that Bill be definitely produced by your Department or might it be produced by another department, for example, the Home Office in an amendment to the forthcoming Criminal Justice Bill?
  (Mr Smith) First of all let me repeat that I do believe that matching the rights and responsibilities is something which underpins the benefit system. The deployment of sanctions and the case for so doing have to be judged on a case-by-case basis across different benefits. For example, on jobseeker's allowance there is a general acceptance that that is an allowance for looking for a job and if you are not looking for a job and not co-operating with the system then a sanction is reasonable. With housing benefit, as I said in the House when I was challenged about this, I very well understand and sympathise with the position of people who are suffering hell from anti-social neighbours and think why is all that being subsidised by the taxpayer. I think though when examining particular proposal and policy measures, and you referred to Frank Field's Bill, we do have to look carefully at the practicalities and the consequences and workability of what has been brought forward. I think the Bill in the end was talked out, was it not, by the Liberal Democrats?

  38. Correct.
  (Mr Smith) Some Liberal Democrats, I should perhaps have said.

  Mr Goodman: One.

Mr Mitchell

  39. Your first answer was perfect.
  (Mr Smith) There are some important practical questions here if you think about it. For those people who are not paying their rent and do not care if they pile up arrears, you have to think through what is the practical consequence of a housing benefit sanction just to shift money from one column in a local authority's ledger to another column; in other words, does it really impact on them? Yes, it might eventually as the arrears crank up and if they are evicted from the house but, of course, if they have got children they will know that Social Services will be under an obligation to house them somewhere else, possibly in more expensive property. We have to think through this in an end-to-end way and see if this sanction really does impact upon the behaviour that we are talking about. Of course, in a small way the reforms that we are exploring through the pathfinder pilots of the standard housing allowance might actually make it more meaningful to operate a sanction system because if you are paying people the money then we might be getting a new culture of people taking more responsibility for their rent paying and maybe a sanction will be more meaningful rather than if it is all going on over their head to the local authority. The other issue that we ran into with Frank Field's Bill was a legal issue about whether it was proper to sanction the benefit recipient, the householder, for the behaviour of other members of the family. Indeed, amendments had to be brought forward to narrow its scope in that way to make sure that it was compliant with legal requirements. I think both of these issues and other aspects of this are things that we need to examine further and we are examining them further. There are other measures as well in terms of anti-social behaviour orders, in terms of the measures that the Deputy Prime Minister is working up in relation to rogue landlords, in particular the exploitation of people in some low demand housing areas. There is work on this front going on in a number of Government departments and obviously I will keep the Committee informed on the progress.

2   Please refer to the supplementary memorandum from the Secretary of State to the Chairman of the Committee, para 20, Ev 20. Back

3   Please refer to the supplementary memorandum from the Secretary of State to the Chairman of the Committee, paras 16-19, Ev 20. Back

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