Work and Pensions Committee
Oral evidence: Local welfare safety net, HC 373-ii
2 December 2015
Ordered by the House of Commons to be published on 2 December 2015.
Members present: Rt Hon Frank Field (Chair), Heidi Allen, Mhairi Black, Ms Karen Buck, John Glen, Steve McCabe, Jeremy Quin
Questions 75 - 148
Witnesses: Jill Farrar, Senior Team Manager, Blackpool Council, Councillor Paul McGlone, Deputy Leader and Cabinet Member for Finance and Investment, Lambeth Council, and Councillor John Fuller, Vice-Chairman, Resources Panel, Local Government Association and Leader South Norfolk District Council, gave evidence.
Q75 Chair: Welcome to you all. Can we move from you, Paul, along the list of witnesses and might you introduce yourselves for the record?
Councillor McGlone: I am Councillor Paul McGlone. I am Deputy Leader of Lambeth Council with Cabinet responsibility for finance.
Jill Farrar: I am Jill Farrar from Blackpool Council and I manage our local welfare provision in Discretionary Housing Payments and Council Tax Reduction Schemes.
Councillor Fuller: My name is John Fuller. I am Leader at South Norfolk District Council in Norfolk. I am also here because I am Vice-Chairman of the Local Government Association’s finance panel.
Chair: Karen, might you just tell us what you were hoping to get from this session?
Ms Karen Buck: Very briefly, and you will obviously know from what you were asked to contribute, this is about trying to work out how the changes—they are not new—particularly accelerated after 2013 with council tax, localisation, with big changes in housing benefits and the extra reliance on DHP, on local social fund. They are placing a much greater onus on what local authorities do to meet that need and, of course, we are looking in the coming years to that becoming even more of the case with further changes that have been announced. What we were trying to draw out from you is what you see as, if not advantages, the ways in which you have changed your working practice to accommodate that, whether there are examples of good practice in the way that services could be integrated and individuals could be targeted for extra assistance on the one hand, but also how you see the challenges, the extra pressures and the demands on local authorities, and possibly variations in practice between local authorities and whether that is a good thing or a bad thing.
Chair: A plea from me, we have even greater pressure on our time today, given that the debate is coming up, so you don’t all need to answer. Please just add in if you have something new to say, and we will begin with Heidi.
Q76 Heidi Allen: Good morning. Jill, this is probably a question for you perhaps to start off with. Looking at this idea of the different claims that a person might have—Council tax support, discretionary housing payments and local welfare—what is your view on having a single assessment process, whether that is good, bad, training issues with staff? What are your feelings on that?
Jill Farrar: A single assessment is very good for both the customer and for the local authority. For one thing, it enables us to give a holistic view of that customer’s needs. It might be that the customer will apply for one element of the scheme but we can consider which would be the best way forward, and an example might be an application because, “I have no money to buy food and I need essentials”. Once we start looking into the circumstances around the individual we may, for instance, find that there is a shortfall in rent that needs to be addressed. We may find that there is difficulty in paying council tax. In that way, we can make sure that the customer does not have to decide themselves and does not have to know which fund they need to apply for. We give them the best all-round help that we can; the right questions are asked at the right time and underlying problems explored in order that we can move people forward.
Q77 Heidi Allen: Any downsides or difficulties? The theory is great but making it happen—is there anything difficult to achieve it?
Jill Farrar: It hasn’t really been the case. You did mention training before; I would say there are two sides to this. The first thing is the knowledge, so obviously the team have to have enough knowledge about the different schemes and, also, about what might be the right thing for people locally. We have developed a tool kit for decision makers and they are able to use that. They need to keep up-to-date with any changes, obviously, but the certain thing, which is just as important, is the ability to diagnose what the problem is. Customers present with one issue and they say, “This is my circumstance”, but only with that very careful questioning and exploring the background can we find out what the issues are. Once we have done a diagnosis we can look at what the right thing might be for that person. Beside the other schemes, we talk to people about local information. It might be the Veterans Welfare Service, for instance, that somebody might be able to get more help from. We liaise with social services very closely with housing options. There is a whole host of reasons—there are multiple and diverse reasons why a person would present with having difficulty paying.
Q78 Chair: When you say you liaise with social services, does that mean once you have got through the gateway there is not a team there to meet you but you have to refer the individual to other departments and other skills?
Jill Farrar: It is a two-way referral process with our scheme. What we have done is talk to all the services and the organisations in the area, including social services. Sometimes the referrals come from social services. What we do is we speak to each customer, so we have a conversation with each customer if necessary. If it is appropriate we might speak to a social worker. We might speak to somebody from the troubled families team. It is whatever is appropriate in that circumstance.
Q79 Heidi Allen: Could I ask you a very, very speedy question? Do you find—I am perhaps putting words into your mouth, so correct me if I am wrong—that perhaps this overall assessment to start with might take you longer to get all the information out, but would you say it is better for the customer and does it save you time and money in the long run?
Jill Farrar: Yes, absolutely. It is part of the decision-making process.
Chair: John and Paul, do you have anything different to add to that?
Councillor Fuller: Yes. You talk about: does it take a bit longer? Our job is to try to solve the problem, not to necessarily throw money at it. It is often the case that people are presenting not just on the issues you raised, LHA and DHP, but there is homelessness, there is debt advice and there will be social issues. It is a triage process. The whole concept of co-location is having a single point of contact and an initial point of contact.
In our authority, we have a dedicated team of people who act in that triage role. They take responsibility for a claim end to end. First, it is quicker, so you mitigate some of those things, but people have an holistic view, not just of the benefit scheme but of local schemes that may apply in certain parts of the district. We have a little market town where the churches might be involved or what have you. It is sorting that out, which isn’t necessarily just about the money, although obviously it has got to stand up financially.
Heidi Allen: It is different, support comes in different ways.
Councillor Fuller: Yes, and, of course, as welfare is localised, we can fold in that local resource, whether it be a volunteer effort or whatever, as well as the national schemes, and that makes the money go further.
Q80 Chair: Paul, if I came into Lambeth to your team, would you have somebody who would see me from beginning to end and not keep posting me off to some other part of the council to deal with a multiplicity of issues?
Councillor McGlone: Yes. The gateway is different from assessment, which is different from targeting and I would make the distinction—triage is a good concept to play with. Wherever people present themselves, whether it be a food bank, whether it be a housing office, whether it be our customer service centre or the town hall, our staff are trained and they are aware of how to get them to the right person, so there is an holistic, rounded approach. As you say, they may be presenting with a particular problem—maybe debt or maybe wanting to apply for something—but we can make the connect between the multiplicity of offers that we may want to refer to them. Council tax support is different from discretionary housing payment, which is different from emergency support, one application; they are different things for different purposes. It is about an informed discussion, about how to signpost people and get them to the services they need for the benefits they are entitled to or additional emergency support they may need.
Q81 Ms Karen Buck: I like what you say about integration and case management. I think it is absolutely right, but isn’t it also the case that bailiff referrals are going up, debt is going up and homelessness is going up? You have painted a very positive picture, but why would all those indicators be going in the wrong way if the model is working? I think you are suggesting it is worse.
Jill Farrar: For us, enforcement agency involvement has not gone up, even though we have had around 10,000 more people paying council tax. I think it is partly because if you can deal with issues as soon as they present, and you look at all the issues involved, that is much better and it prevents things escalating to the point of crisis intervention. Whether it is money or whether it is health, it takes up more resources and more money at a later stage, so it is better if we can identify issues early on and prevent them from escalating.
Q82 Ms Karen Buck: Just very quickly, is the implication that authorities where homelessness is rising, debt is rising and bailiff enforcement is rising are not doing their job properly?
Councillor Fuller: It may well be that they are not taking that holistic approach. As with Jill, last year in our own authority, which is the district authority of Norfolk, we had about 130,000 to 140,000 residents. There are only 700 cases that we needed to take to court. Of those, less than half were provided to bailiffs, but in the end, before the bailiffs got there, we recovered 80% of the debt on attachments of earnings and other benefits. Sometimes that close working with the DWP is important, precisely to avoid the bailiff, if we can get an attachment at source. Of course, that lends itself to co-working, co-location. Often as well there are lots of different pots available: not only the national pots of DHP but our own crisis funds as well, which come out of our own localised council tax payers. I encourage my staff to take the labels off. There is a pot of money and, to a certain extent, in solving a problem I am blind as to whether it comes from DHP or our own crisis fund, “Let’s see if we can identify that problem” and that is how it should be. It may well be that, where people keep the labels on, that is where you are getting some of these unintended and unfortunate consequences.
Q83 Heidi Allen: Just on that, because presumably the risk is when the computer says, “No, you don’t fit that box”. It is just a different way of working, I guess, isn’t it?
Councillor McGlone: We have developed a financial structure that offers people interventions that may help: debt advice, money advice, benefits advice and, simultaneously, with a debt-collection strategy. We have to protect the right of the council to collect its debts. That is right and proper. I have proven—simply by having two strategies that work together—that the interventions are sensitive enough that three things have happened in Lambeth. The number of summons we issue has dropped. We have a policy of not using bailiffs against protected groups who are in our council tax support scheme, and debt collection has gone up. If you intervene cleverly and sensitively you can intervene at the right stage.
Q84 Heidi Allen: When you say “debt collection”, you mean as in getting the debt in as opposed to your need to invoke debt collection?
Councillor McGlone: Yes. We raise nearly £400 million a year in debt of all types. We have to protect the right to collect that, but it is the manner in which you seek to go about it and intervene early if you are getting the intelligence telling you that people are falling into debt; intervene, offer them advice and guidance coming out of that and, where they are vulnerable people, we will not use the last resort, which is bailiffs.
Q85 Heidi Allen: I am going to move on. So much of this is about efficiency and delivering the best service and the world is all going online. Given that a lot of the process for applicants is online, is that the best system for people on low incomes or people struggling? How do they work with an online world?
Jill Farrar: Our application is online, but we also have a free phone number and people can gain access from any library. The reason that we ask people to go to libraries is because they will help people to fill in a form, but it is much more than that. Quite often people are digitally excluded; they are financially excluded, if they don’t have access to a computer or the internet they can’t look at comparison websites, utilities; all that sort of thing. The library is a pathway for them to be able to access that learning and to maybe skill up in being able to use a computer. They give them an email address. It is twofold. It is tackling these other issues, as well as helping people apply to the scheme.
Councillor McGlone: There is an imperative for all local authorities to be digital by default, simply because that is far, far cheaper. It is how you simultaneously identify those who are not equipped. We all have schemes. We have digi-buddies who volunteer to get out and identify the people. They are referred and they train them up so they feel enabled, but that is for those who need access to the benefit scheme and advice.
Q86 Heidi Allen: Can you tell us a little bit more about that system, the digi-buddy?
Councillor McGlone: Yes, it is a scheme of volunteers whom we train. They are young people, who come with natural skills, but they are trained and then people are referred to them. They have a series of sessions where they work with them, however basic their knowledge is, to get them up to a level that they feel confident to be able to use the internet, to be able to use whatever benefit system they need to access digitally. They sign them off so that they feel enabled to go to the next stage. The next stage might be talking about whether they are able to work or not. If that is a barrier, then deal with the barrier and move them on to the next issue about making them work-ready or whatever. It is a very successful scheme.
Heidi Allen: That is a great idea, I have to say.
Councillor Fuller: We have a long tail. In my own authority we have 5,900 or so people on housing benefit as they start to go down on to universal credit. There is going to be a long tail of people reducing for whom we have to have the same management for difficult cases. Difficult cases may be simply as a result of chaotic lifestyles or drug dependency or mental health issues, or their family circumstances may be so complicated the universal credit system hasn’t caught up with them yet and that is quite an issue. Digital by default is for those people who are the simplest cases. That is fine, but one has to recognise the long tail has to be managed for the difficult cases. It is in those cases, even where universal credit has been accepted, that sometimes accidents happen and we need to apply the DHP process to them to fix either a short or a long-term problem. They present themselves back to the council, even though they are on universal credit. You can’t divorce the council’s role from this process, even when people do go digital.
Q87 Chair: Can I ask a question before we go on to Mhairi? You talked about housing benefit. Some authorities use their housing benefit data to identify children who are eligible for free school dinners and award them the status and also ensure that the schools know that they can claim pupil premium for them. Do you use that? We have been talking about the claimants doing all of this, what do you do back for the claimants?
Councillor Fuller: I am not aware of that in my own authority, but I could let you know.
Jill Farrar: We do.
Councillor McGlone: The intelligent use of the various databases that a local authority has is imperative. I am not sure that is a direct answer, and we can find that out, but it is a good ask. We interrogate databases collectively as one organisation, as you should, then you make connections that you might not have made.
Councillor Fuller: Can I make a point about the libraries as well? It takes 45 minutes to process your own universal credit application on the site if you have everything with you. Many libraries time the session out after 30 minutes and you can’t save the session, so there are some practical points. If only the UC could save progress, not only because that is convenient—if you have to go and get a document photocopied—but also if you go back to the CAB or present to our own council we could then call it up and see how far you have got. May I make that plea?
Q88 Mhairi Black: This is probably a question more directed at Paul and John. How widespread is the problem of Jobcentre Plus staff referring people to claim social welfare, and in actual fact they should be applying for something like the DWP, short-term benefit advance or hardship payment?
Jill Farrar: We certainly do get people coming and applying to our scheme where they might be entitled to a short-term benefit advance. We refer people back to the DWP in that circumstance. It tends to be when people might have been sanctioned or when they have made a claim and they are waiting for that first payment.
Councillor McGlone: For us there were teething problems and there were a series of inappropriate referrals. Mostly, if you have a robust and solid relationship with your partners locally with DWP, as we do, you could go back to them. It is a matter of training, using the protocols and training their staff properly so they know the options they have that they should invoke before they might be entitled to be referred to the local authority perhaps for an emergency support grant. I would say I think we will probably all overcome those.
The big issue going forward with universal credit is accepting it is going to be phased. Things like payment monthly in arrears is going to create real pressure because, even if people are entitled to a payment in advance, I suspect our feeling and judgment is that won’t be sufficient to get them through that period. There will constantly be people falling into hardship. That will then put pressure on the local authority’s emergency support grant, perhaps way above the ability of the resources we have to meet that need. With payment monthly in advance, adding on another week for processing, it could be five or six weeks before people get benefits. A lot of people falling into and out of benefits will not have the financial resources to cope with that and, therefore, the demand on the emergency support grant in particular could escalate. That is our judgment.
Q89 Mhairi Black: Following on from that point, do you think that the inappropriate or premature referral from JCP staff is a DWP training issue, or is there any evidence to suggest that this is the DWP trying to shift financial burden on to local councils?
Councillor McGlone: It has to be because it is going to be rule-based. They will know what options they have to utilise advance payments of the funds before they invoke a right to refer them. That is a training issue and a protocol issue and they will know very clearly what options they have that should be invoked first.
Q90 Chair: If people are coming into Lambeth or Blackpool and you think they are eligible for advances from DWP, do you just pick up the phone and talk to an officer in DWP and say, “Are you going to pay, please?”
Jill Farrar: No. There might be some circumstances where we can help them as well, but if we think they are eligible for a short-term benefit advance we are advising them to go back to the jobcentre.
Q91 Chair: They go back, but is the jobcentre expecting them and giving them an appointment so they quickly move in, or are they just with the whole crowd waiting around?
Jill Farrar: Yes. At the moment we don’t have that direct—
Chair: John, is it different for you?
Councillor Fuller: Yes, we second. We have an informal arrangement working around the system with our local DWP in Norfolk. We put our benefits clerks into the Jobcentre one day a week. For those difficult cases, first of all, you don’t get the thrashing about because they are working side by side on the difficult cases. Co-location has to be one of the big themes going forward. As stated, we do know that the DWP is likely to be re-contracted in 2018. Rather than sign the leases now let’s just take a pause. My suggestion would be, on behalf of the local government family, to say, “If co-location is something that is desirable”—and I think it is—“don’t roll over those leases for another 10 years. Let’s just see whether we can have a proper conversation and not just about co-location”. The housing benefit authorities are also the planning and housing authorities. They are responsible for growth. The benefit is the consequence of lack of growth. If we get it on the same geography, we might have not just an integrated system that processes benefits most effectively but we are going to take that welfare in to work for the next level.
The old excuses—and they were excuses—on IT security were, “You can’t possibly have council people looking at DWP systems”. We are all in the same digital family nowadays. We are all in the secure Government network. Since the child benefit data was lost you cannot believe how much effort has been put into digital security.
Q92 Chair: For me, as a claimant in Norfolk and you think I am eligible for a short-term benefit advance, do I wait and you tell me, “I am in the office on Thursday. Come along on Thursday” or, given the integration of the computer system, do you enter my claim and get them to decide it then and there?
Councillor Fuller: The amount of cross-referral from JCP into the council, which is separate buildings at the moment—we only come together once a week—is such that they—
Chair: I thought you were suggesting there is this wonderful link up with your computers.
Councillor Fuller: No, that is what we need.
Q93 Chair: I see—what you need.
Councillor Fuller: That is what we need. The excuse is that we can’t link. I do not see why benefit staff sitting in council offices couldn’t have a DWP screen. It would be their DWP screen. The digital reasons why they can’t co-locate, those issues have just fallen away. It is old news. If we were serious about co-location there is an opportunity.
Q94 Chair: Paul, I am coming into Lambeth and your staff think I am eligible for a short-term benefit advance, do you ring up, do you get me an appointment, do you get an agreement that I am not maybe waiting weeks for this, that I am going to get it in a day or what?
Councillor McGlone: There is everything to be gained from the concept of co-location. With our universal services delivered locally—a pilot that Lambeth, Lewisham and Southwark participated in, co-locating in the jobcentre in Streatham—you would get that joined-up advice. They go in there to do one thing. They can access the digi-buddy service if they need that enablement. They can get financial advice or debt advice in the same place, and they will get the question answered around entitlement to advance payment if they wanted. There is everything to be gained from co-location. IT solutions are one level. There is nothing better than co-location, human contact and an holistic approach in the same place at the same time.
Q95 Chair: If you are like Westminster where they have flogged all their buildings, bar one, should the council be thinking of going into Jobcentre Plus buildings and running its services from there?
Councillor McGlone: That is a good point, but not if we are going from 14 buildings to two where they may have one single customer service centre for the whole of Lambeth. Taking over the buildings presents that issue about asset management and running the costs. It is an absolutely fair point to make: who will take responsibility? It will be an additional cost, as to whether that can be balanced with the benefits to be gained by co-locating the services and whether, therefore, the unit cost per building is an acceptable cost for that joined-up delivery, but it could add on costs that we have already taken out.
Q96 Mhairi Black: If we move on to local authority debt collection, how appropriate and how effective do you think it is for councils to issue court summons and instruct bailiffs to collect the council tax debt from people, in particular on very low incomes and particularly those who have been granted council tax support?
Councillor McGlone: This is something I have done a huge amount of work on in the last several years. First off, local authorities all collect debt. We all have quite a large amount of debt. We are responsible for making sure it is being joined up and that you know what you are doing because sometimes it is multiple debts. We need to have very clear and explicit policies and procedures, so that if people ask it can be explained and they can see that the process is being followed and that staff know how to follow it. Our big intervention was to say, “If you have followed your timelines don’t just jump to issuing a summons. That triggers a fee, which increases the debt, which makes the problem worse”. Is there intervention? If we know enough about our residents—know enough about our customers, whatever you want to call them—you should know how much debt they owe and you should know they are falling into debt.
As I have said, we have a council tax support scheme. We are actually the most generous in London. We exclude carers, disabled people, all widows and widowers and those effectively on a benefit, so that they never present a problem. You will not see any of those going to court, because we exclude them and pay for their council tax. But for those working-age claimants it is possible, so you have to reserve the right if all the interventions fail: if they refuse to respond to letters, if they refuse to respond to the phone calls, if you have their phone number, if they refuse the offer of debt advice and, if they are tenants, a call from a housing officer on the door. We do that. If people don’t engage, sometimes it is the moment of crisis that triggers the resolution, even if there is a settlement to pay it over a long period of time. I know that is hard, but sometimes that happens. That is human nature. We are trying to avoid using the court process—issuing a summons, using bailiffs—as an automatic process. We intervene. My political steer is that is the last step in a very long process, but we have to reserve the right.
Q97 Mhairi Black: Why then has the use of bailiffs increased so much?
Councillor McGlone: We make a distinction in Lambeth—can’t pay, won’t pay—and then, following my strategy, if people cannot pay then we absolutely intervene. I am really reluctant to see anyone who is falling into debt because of low income or history or a chaotic lifestyle or both. Therefore, we have a policy of not using bailiffs in those categories and there are various categories, whether it is mental health or whatever.
Q98 Chair: Do you refer those families to the troubled families unit?
Councillor McGlone: It is possible there is a crossover. They may already have been on to that. That is true. That is a good question. We work as one council and we know whether they are troubled families and have no means to public funds, and there are other cohorts so we work collectively. We know who they are before we take action and there are various interventions by officers making sure that we don’t take people to court if we know they are vulnerable.
Q99 Jeremy Quin: Paul, it is interesting what you were saying about the moment of crisis: something is required to get people to confront the situation they are in. I just want to be more granular on the people you are excluding. Is it those with chaotic lifestyles and those who simply cannot pay, or are you saying that in all cases you need to get to a crunch point and at that stage people are able to properly address their holistic issues?
Councillor McGlone: You have to reserve the right to collect the debt. We must not fetter our discretion to collect a debt, point one. Two, if there is sophisticated financial structure in interventions and the debt collection start to work in tandem, then there will be sufficient interventions to make sure that we identify vulnerable people. We are talking about definitions of vulnerable people, so we know who they are. I am not just saying they are vulnerable. They have definitions. Those interventions can be achieved and, hopefully, put people back on course to paying their debt.
We do not use bailiffs against people who are in our protected category groups but for others, even though they might be in the benefit system—and I know that is hard—we have to reserve the right to extend the crisis triggers so that perhaps you can come to a reasonable settlement where the debt is paid over a longer period of time. Often people will not respond until that very last step.
Q100 Chair: Do you publish what your vulnerable categories are?
Councillor McGlone: Do we publish them? Certainly in the council tax support scheme and our housing benefits payment scheme the categories are very clear about who is entitled, yes.
Q101 Mhairi Black: Is there a possibility for local authorities in England and Wales to agree on a breathing space-style of scheme, whereby creditors agree to freeze interest charges and enforcement action while an affordable repayment plan is agreed?
Councillor McGlone: I would say absolutely. We work on a principle of conditionality. We have these pots of money—the emergency support grant, the discretionary housing benefit, council tax support access—but if people are prepared to work with us, we communicate, we try hard and we get there; we will resolve the debt problem. We can use one of those pots of money if they are entitled and work with us on other options so they do not continually fall into debt. Maybe it is about getting a job; maybe it is other options such as moving to a more affordable house; maybe it is about getting a digi-buddy so you can access the benefits of the system and can manage your own life. It is about helping people help themselves. So absolutely, conditionality, “You work with us, we will work with you and we will not use debt collection processes and court proceedings against you, but it is conditional; work with us, please work with us”.
Councillor Fuller: I would like to give you some practical examples. There was case in our own authority where a single mother got behind with debt. Her son had bowel issues and was truanting. It came to our attention because he was truanting and the reason was that his clothes were dirty and they could not wash the clothes. The mother was renting all these appliances and she had to go to the laundrette, which was expensive, so we bought her a washing machine. The washing machine was the hook and it was not cash. Last year in Norfolk 765 cookers were bought, 627 fridges, 290 washing machines. This was not a lot of money but it solved the problem. The monthly outgoings went down. We then made an offer to her creditors that fixed the problem because she was not spending so much.
This is a fantastic opportunity if you can localise this stuff, you can have the entire constellation, not just as you said, the DHP and all the things that the DWP is responsible for, but all those other things that people present to their local council. We have talented staff who can conduct the orchestra and we can try to sort these problems out. In that particular case not only was there a better outcome and little Johnny got to go to school, but we did not have to enforce. It needs local leadership, co-location, a full understanding and an end-to-end process. This is why the plea from the local government sector is, “Trust us to go and do this stuff. We can make the state’s money go further by applying this intellectual property”.
Q102 Ms Karen Buck: I hear that. I still do not understand what the answer is in respect of all of those local authorities where enforcement is going up, debt is going up and homelessness is going up. Are you saying that they are doing it wrong? That is the clear implication of what you are saying. Who should we trust? You are saying, “Trust us”, but there are clearly lots of local authorities where none of this is working.
Councillor Fuller: There has to be a sanction in the end because you have to be fair to the people who are comfortably off or even in limited circumstances who do pay. There is a moral hazard point here. You cannot not enforce except in certain cases—as Paul has laid out—and we have similar arrangements in our own authority.
Q103 Chair: John, are you saying that those authorities where enforcement is going down are being lax with the moral hazards that anybody has in running a scheme like this?
Councillor Fuller: Our enforcement is going down because we are trying to solve the problem. Our early help hub solved 1,000 individual cases last year out of a population of 130,000.
Jill Farrar: We have an in-house debt adviser, and at every stage of recovery there is an opportunity to make arrangements to help people, to try to engage with people. It is at those early stages where you need to try to solve the problems to stop it getting to the stage where we are issuing summonses.
Councillor McGlone: We are investing nearly £8 million over our three-year budget cycle in various financial resilience interventions, including debt advice, to try to reach out and offer that advice to stop people falling into debt. The emergency support grant funding is only about £2.6 million of that, so we are investing a huge amount in enabling people to help themselves, and it has to be helping people help themselves. You are right that there is a bit of entrenchment around debt. People’s debt is rising and people’s families’ debt is rising, not in the benefit system—and that is a problem we all have to look to—and homelessness is rising, certainly in Lambeth. I do believe that with the right sensitive engagement you can help people help themselves and stop them falling into a situation arriving at court and that is the first you know of the issue.
Q104 Ms Karen Buck: Does this not also assume that the benefit situation, the welfare situation, is static? If the benefit cap is coming down and if there are additional pressures on housing allowances, how will you cope with that? What these changes have meant since 2013 and what the next wave will mean is that for the first time people will be asked to make a contribution to council tax and housing costs below what the state used to deem was the minimum amount that they should have to live on. How much longer can we ask people to make contributions below the minimum we have already said the state should give them to live on?
Councillor McGlone: The benefit cap for us was a very crude measure. It is really the cost of living. It gets to a crunch point where people’s ability to make compromises for themselves gets to they then fall off the edge and end up in food banks and so on. £23,000, or whatever it is, is not a lot to live on with a family in London. The problem is going to worsen and we are all watching the statistics. I think in the next year you will find lots of families just collapsing, falling into debt, and destitution, family poverty and childhood poverty will increase. I think that is the reality. If you don’t recognise the cost of living in your place and match that to an acceptable income level—the London living wage is our measure—then the obvious will happen. They will fall off the cliff, but they fall off the cliff with huge debt or hidden debt or loan shark debt and so on. People will cope, they will do what they have to do, but often it is the wrong thing. I think we will find there will be an escalation of household debt.
Q105 John Glen: The written evidence we have received tells us that there is little evaluation of local welfare assistance as a whole, and there is a lot of regional variation and a lot of programme analysis. Is there not a case, or is it not desirable to have a set of minimum standards for local welfare assistance? If that is desirable, who do you think they should be focused on and who should be responsible for drawing them up and monitoring them?
Jill Farrar: Yes, there should be minimum standards and I think it should be administered by districts. One example is Blackpool, which is a unitary authority. We have a shared service with Fylde, but we cannot give the same holistic help to our Fylde customers because Lancashire County holds the local welfare provision scheme. I think districts should hold the fund and very much that local authorities should be writing their schemes because they have the local knowledge, they know the people and their own area. One other thing is that, prior to it being devolved to local authorities, the guidance for crisis loans and community care grants was around 250-odd pages long. I think the DWP has probably tried to look at every conceivable scenario, which is not always the best way to go, but a clear set of guidance would be useful. Sometimes one of our considerations is: if we didn’t do this, what would happen? It is the impact of not doing it.
Councillor McGlone: We are three years in, so the new burdens for transferred money were cut and we carried on and it has been cut further. Risks are with local authorities now and we are responding as best we can with those pots of money. If the intelligence is telling you that the local welfare safety net would be better if there were some universally fair standards, I would agree with you. Would they be statutory and would that then trigger an obligation for ring-fenced funding to follow the need? I would be up for that because I think I could see an area here where the welfare safety net is not going to cope with economic cycles. The risk to local authorities, if you accept the argument that the economy is improving that is fine, but what about when the economy turns round? There is inverse demand on local authorities who will then have limited funding and will be responding to other pressures. There will be a contradictory demand on local authority services and benefits. I think a universally fairer set of standards would be a good thing. I am not entirely clear whether that would be statutory and followed through with a recognition of the funding over economic cycles.
Councillor Fuller: Let’s be clear: we have statutory standards as it is, so it is not as if we are in a totally unregulated environment, but the point Paul makes is quite a good one. There has been a transfer of risk from central to local government. The council tax support scheme is a transfer of risk. Interestingly, some of the DHP work and the temporary accommodation management allowance has gone from the DWP’s annual managed expenditure and been passported through to the DCLG, which is subject to departmental expenditure limits. I am getting under the bonnet here on Treasury-type stuff, but you can start to see that if the finance has been taken from DWP into DCLG it is going to be subject over time to the 24% reduction funding, which we are anticipating over this Parliament, as well as the variation. That transfer of risk, while we may be okay this year as the Parliament progresses, is an additional burden and it would be awkward if that was aggravated by further gold-plating.
Q106 John Glen: John, you have given good examples of your own South Norfolk situation and the interventions you have made. It would be true with your LGA hat on that you can see a wide variance in the quality of the joined-up interventions and welfare provision across the country. Where is the mechanism to drive people to adopt some of your best practices?
Councillor Fuller: We are subject to a DCLG transformation award, so we are part of a national pilot. What we hope, if the system works as intended, is that the results of that pilot should be picked up by the sector more widely. What we have worked out is that not only is it saving money but also it is further reducing the impact on the health service and adult social care because we are sorting the problems out. The prevention case is one where we have really exceeded—
Q107 John Glen: I get that, but why isn’t your experience being readily taken up and transferred to other parts of the country? It seems to me that there is an inadequate transfer mechanism. You are in quite an affluent part of the country. Are the resources just not there elsewhere?
Councillor Fuller: As you say, because our finances are not absolutely back to bare boards yet, we have been able to take a longer approach. We have provided space, without any rental or seat charges, to the other statutory entities, whether they are the county council, DWP, the police and crime and things like that, to sit and talk together. We are co-locating them in an early help hub, which sounds grand but it is a meeting space where people can talk.
Chair: I do apologise. We will come back to you and ask you that question in written form, if we may, on the business of that: how the best ideas are transferred, not just in local government, but there might be lessons there more generally.
Q108 Jeremy Quin: A rather broad question, I am afraid, with about two minutes to go. Notwithstanding that, John, we all want to see local welfare assistance schemes continuing to be sustainable. Do you see hope in the new arrangements for finance for local government that that is going to be an achievable objective?
Councillor Fuller: It boils down to the co-location. We understand things are going digital by default, but there needs to be a recognition from DWP that for the complicated cases, for whatever reason, the councils need to be involved. Even where people have gone on to universal credit, DHP can still be required in certain circumstances, because if someone loses their job or whatever they need to fall back on the state. We need to have councils empowered, co-located with the DWP, to sort out some of the DHP issues. Where universal credit has not fully understood the particular circumstances, the DHP is a sticking plaster over that. It is time now for the Local Government Association to sit down and have a proper discussion with the DWP about this and also what the role of councils is in the apportionment between the DWP and councils. Dare I say it, the opportunity to review the DWP estate in 2018 is a good waypoint. It would be a shame if those leases were rolled over because it would stop the opportunity of doing all the good things that our colleagues have said for probably a further 10 years or whatever the life of the lease is.
Q109 Chair: Do you have anything different to say?
Councillor McGlone: I am trying to hang on to the answer to setting minimum standards. If there are places that are not providing them that is clearly wrong, and I think that was a line of argument. Therefore, there should be some minimum standards so at least if people throughout the country fall into crisis, fall into the welfare system and crisis, we all must have a mechanism to help them out of that. It would be a postcode lottery if some parts of the country did not have that safety net, whatever the minimum standards are. We seek to do the best we can on limited funding and have multiple means of intervention to help us support people to help themselves, including trying to get them into a sustainable job because, that is the right thing to do. I would welcome some minimum standards that would allow us all to agree and test it as to whether the minimum is at least acceptable. Having no standards is clearly wrong because some people, if it is a postcode lottery, will be missing out.
Chair: Thank you very much. We are grateful. We are going to come back, if we may, with some other questions to you and also to take up your point about how does the local government department build in a grant that is anti-cyclical, given that however efficient you are, you can just be washed away under these huge tides? Thank you very much for being here today and helping us.
Examination of Witnesses
Witnesses: Mr Marcus Jones MP, Parliamentary Under-Secretary of State (Minister for Local Government), Department for Communities and Local Government, Matthew Style, Director of Local Government Finance, Department for Communities and Local Government, Rt Hon Lord Freud, Minister for Welfare Reform, Department for Work and Pensions, and Pete Searle, Strategy Director, Working Age Benefits, Department for Work and Pensions, gave evidence.
Q110 Chair: Welcome. Thank you very much for coming today. For the sake of the record, would you please say who you are and identify yourselves?
Matthew Style: My name is Matthew Style. I am the Director of Local Government Finance in the Department for Communities and Local Government.
Mr Jones: Marcus Jones, Minister for Local Government.
Lord Freud: David Freud, Minister for Welfare Reform.
Pete Searle: Pete Searle, Strategy Director, Working Age Benefits, DWP.
Q111 Heidi Allen: Good morning, gentlemen. David, a question for you. A personal hobbyhorse of mine and one that we are hearing quite a lot about in our evidence sessions is the future of jobcentres. Given that the estate contract is coming up, we are hearing more and more from different people that the idea of co-location with councils has to be something we look at. Can you give me your thoughts on that, what your views are and how you might see the future of jobcentres?
Lord Freud: We have been building a much deeper relationship with local authorities in recent years, and part of that is universal support, the district partnerships we have signed now. I think we are up to two thirds of local authorities rolling out alongside universal credit. One of the things that we are looking at, which is at one level separate but ties together, is co-locating, and there are different levels of co-location. We can just move into council premises that are available—that is convenient, but no real change in the way we do it—or we can move into the service level. There are some examples like Flint, for example, where we are in one room like this: that side of room is Jobcentre Plus staff, the other side of the room is housing benefit delivery and we share facilities like the computers in the middle. There is a range and we are looking at this very closely because, as you will be aware, one of the things that is happening is that our prime deal on real estate—the prime contract—is coming to an end in 2018, so we have to work out where we go: do we stay, move, co-locate? We are very actively looking at all of those options right now so that we are in a good position in what is less than three years’ time.
Q112 Chair: On that, David, where local authorities have flogged off their town halls, is part of this process when you are reviewing the estate saying to local authorities, “Do you want the relevant part of your staff to come in and work in our Jobcentre Plus building and then we share the costs?”
Lord Freud: We have to secure, in 2018, premises for our staff and we have to take each local area by local area to find out what the optimum place is for us. I have no doubt we will be talking in virtually every local area about what the opportunities are for us to go in together. It may be that sometimes the premises that we happen to be in are good ones and that the local authority thinks, “Yes, we can do some combination there” or vice versa. We are literally looking at the whole estate as we move up to that 2018 point.
Q113 Jeremy Quin: Council tax support can be an important part of personal budgets. To be consistent with universal benefit is there a possibility of that being rolled in at some stage?
Mr Jones: There are no formal plans to roll localised council tax support in with universal credit at this point, but in the Local Government Finance Act 2012 we made it quite clear that the local council tax support scheme would be reviewed after three years, and within that review it was referenced that we look at local council tax support in the context of universal credit. I am able, Chairman, to say that that review will be announced today. We will also be announcing that Mr Eric Ollerenshaw will be heading up that independent review on behalf of the Government. The terms of reference for that review will be published today on the Government website and the review will report back to me by the end of March.
Q114 Jeremy Quin: Thank you for that, Minister. I suppose now there is a review you will not be able to say very much more about it. There is recognition that universal credit and the mechanism of local council tax support can be contradictory, and that is presumably something you would wish to address as part of the review?
Mr Jones: In the principle of decentralisation and allowing local areas to make local decisions based on local circumstances, we very much want to go down the route of allowing local authorities to have the autonomy to support people in relation to council tax in the way they think is right for the local circumstances. During the process of the Local Government Finance Act and the Bill that came through the House, we undertook to look very carefully at a number of areas, including the interaction of LCTS with universal credit. As I say, that review is taking place and will come back to me by the end of March.
Q115 Chair: David, it was always in your original plan that it should be part of universal credit, wasn’t it?
Lord Freud: Yes. I think I am pretty firmly on record in that area. Things did change in that context in the sense that there was much more localisation going on and the decision was taken to put this in as part of the local involvement and management. We spend a lot of time working with local authorities to make sure that we optimise the relationship between the two, so there is an ongoing dialogue with the various stakeholders, whether it is at Government level or local authority level, to make sure that that happens.
Q116 Chair: But it was a defeat, wasn’t it, for the original idea? On that basis, David, local authorities could have had half of administering universal credit, couldn’t they? The aim was to have a single benefit, one point of entry, and to lower, if at all possible, the marginal tax rates for people so that would be a bigger incentive to work?
Lord Freud: The objective was to have a simplified benefit system and to take the main ones out. Clearly there remain quite considerable benefits outside, whether it is child benefit or PIP, and the large number of passported benefits. You could look at council tax in that context. Once we have a working universal credit by the end of this Parliament, there are a lot of options for what one would look at doing with the benefit system. I don’t disagree with the fundamental point, but I think that right now we are where we are with the system working pretty well. You will have seen evidence; I know you went down to Croydon recently. All of those thoughts and options are for another Parliament.
Q117 Chair: Sure, but Marcus’s review is really important, isn’t it, for the future development of universal credit?
Lord Freud: I will certainly read it with great interest.
Chair: We hope you have an input as well.
Q118 John Glen: Marcus, could we turn to debt collection? Do you think it is appropriate for councils to instruct bailiffs and court summons for the very poorest, particularly those who have been granted council tax support, when it comes to dealing with council tax debt?
Mr Jones: I think the collection and enforcement of unpaid council tax and any other debts that a local authority has is a matter for the particular local authority. They are usually best placed to work out what the local circumstances are and the circumstances of the individual tax payer who has fallen into arrears. We have to bear in mind that every single penny of council tax that is not collected is an additional burden on other council tax payers but, that said, we expect councils to be sympathetic to those who are in genuine hardship.
Q119 John Glen: Do you issue guidance to ensure that?
Mr Jones: We do issue guidance. I would like to make it quite clear that authorities may well subcontract out the function of collecting council tax arrears, but whether or not they subcontract out the collection process, it is still the local authority’s responsibility. That responsibility firmly lies with the local authority: the people collecting those debts must do it in a proportionate and fair way. Guidance was issued in 2013 to local authorities under a document called “Guidance to local councils on good practice in the collection of council tax arrears”. The Ministry of Justice, just last year, introduced major reforms in relation to bailiffs to try to strengthen the protection that people have against rogue bailiffs who use unsound, unsafe and unfair methods. The work that has been done is currently being reviewed. They are doing an end of first year review and we should know fairly soon from the Ministry of Justice what the results are of that review and whether it believes there are any further changes that need to be considered in relation to the way in which bailiffs are operating in this space.
Q120 John Glen: You know, and we all know in our constituencies, that people get into complex situations with debt. One solution, notwithstanding what you say about taking action as a result of that review, is to have some sort of breathing space scheme. I believe in Scotland there is the debt agreement scheme that works to try to find the breathing space to resolve an individual’s debt problems, looking at all of their circumstances. That seems to me an appropriate and reasonable way of dealing with the complexity in the lives of some of these individuals. Are there any plans for you or the Department to look at this and see if any of it could be adopted in the guidance?
Mr Jones: We expect councils to look at individual circumstances on the basis that they have to look at each case on its merits and they should not just be using a blanket coverall situation to deal with every set of circumstances. Local authorities have the opportunity now to assist tax payers who have genuine hardship and difficulty in paying their council tax. They can agree a discount or an exemption to either an individual or a group of people if they feel it appropriate in the local area. They can also defer or agree to an alternative payment scheme that would help an individual person or family. Having that work on a local basis is the most appropriate way because it is very difficult for us to tell from Whitehall what is the most appropriate thing for a particular circumstance of a family or individual.
Q121 Chair: Marcus, the Inland Revenue clearly thinks I am one of these chaotic people, so much so that I have to employ an accountant to do the tax return for me. One of the real successes, built on the previous Government, has been the troubled families unit. When there is a possibility of the bailiffs being sent in—developing John’s cooling-off period—why aren’t all those families referred to the troubled families unit to help, just like my accountant helps me?
Mr Jones: As you know, local councils do not necessarily refer people to the troubled families unit but, as I said, they do have mechanisms by which they can assist people. In that sense, data sharing has also become more important and the work that David has just mentioned about Jobcentre Plus and the data sharing that can be done there has certainly helped as well.
Q122 Chair: Marcus, we understand that, but given when I look at how the troubled families unit has worked in Birkenhead—by all means doing the data sharing, all of that is part of it—they do practise, very effectively, tough love and it does turn round families who would otherwise find it impossible, just as I find completing my tax return impossible and I pay someone else to do it. Why isn’t there that mechanism?
Lord Freud: On this very specific point on breathing space, the issue is that we do have organisations that work on getting agreements with debtors. The problem that we have is there are some free riders; not all of the debtors will go into that process. One of the things I am looking at currently is how we can make that system better so that it is easier when there is agreement to have some debt relief, or a bit of space to make sure that it is easier for the debtors to reach that deal, and there are not necessarily holdouts. It is a really good point and it is something that we are looking at.
Q123 Ms Karen Buck: If this system is working as well as I think you are suggesting, why was there a 16% rise in the number of bailiff referrals by local authorities since last year, most of which is driven by council tax arrears enforcement?
Mr Jones: As I said before, it is for local authorities to determine how they collect council tax debt.
Q124 Ms Karen Buck: So you are happy with it going up?
Mr Jones: But what I have said to the Committee is that we have made it quite clear that we need to make sure that that debt enforcement is being done properly and proportionately.
Q125 Ms Karen Buck: So you are not happy it is going up?
Mr Jones: What I am saying is that we have to use proportionate measures to collect council tax. As I said before, every penny of council tax that is not collected means that somebody else within that local authority area ends up with a greater burden.
Q126 Ms Karen Buck: So you are happy it is going it up? I am not quite sure whether you are happy it is going up or not.
Mr Jones: What I am saying to you is that there are mechanisms by which local authorities can judge that. The other thing is that we have a review, and I think that comes back to the Chairman’s question as well. These are important things that need to come out of the review that is going to be done, particularly in terms of the point you have made and in relation to the support that is given to people, the interaction between local council tax support and universal credit, and in relation to the point that the Chairman made earlier.
Q127 Steve McCabe: Marcus, what does the guidance on bailiffs in debt collection say about local authorities who are trying to make a profit out of debt collection?
Mr Jones: Like I say, enforcement needs to be proportionate. Councils should not be setting their stall out to make a profit from the most vulnerable people in our society. Councils have to use a mechanism to recover council tax arrears but that should be proportionate, particularly in relation to the fees compared to debt, and it should not put people at a disadvantage so that the local authority gains from that.
Q128 Mhairi Black: We heard from a previous Committee session that some local councils are using over half of their DHP allocation to pay for temporary accommodation for homeless people. Is this something that is appropriate?
Lord Freud: We have a package of DHPs that is made up from the different components and we provide that for local authorities. It is effectively an overall ring-fence and we don’t ring-fence within that. There is a whole series of ways that they can spend that money in the housing context. It is up to local authorities. We do monitor where the spend is and there may be a few councils that are doing that, but overall we know what the spending is going for. It does not seem to be in bulk, from the figures we have, going to anything like that proportion for TA.
Q129 Mhairi Black: Given the fact that some local authorities are turning to DHP in order to top up the rent payments for temporary accommodation, particularly for homeless applicants subject to the overall benefit cap, this is likely to become more widespread. Are local authorities turning to DHP as the answer to providing suitable accommodation?
Lord Freud: What we have said to local authorities is that they have to manage the overall issue of helping people with their housing, and that is what the DHP is for. They have discretion within that to maximise the efficiency with which they spend that money. As I say, I have not seen evidence in the figures that I have seen that there is a huge proportion going for that particular purpose. There are various figures showing a proportion around, say, 10% going on helping people to move into alternative accommodation. There is a good element, almost a third, to help with short-term costs while you move into alternative accommodation. That might be within that context. There is helping while people look for employment. In the survey, we can see where all these moneys are and I have not seen a huge figure, or it is not evident that there is a huge figure, across the piece for what you are saying. There may be occasional councils and it may be absolutely the right thing for those particular councils to be spending their money on.
Q130 Mhairi Black: In the event that there is an increase, with councils in the position where they are having to use DHP, how can we ensure that local authorities have the resources to meet their statutory duty to house people suitably but also to have the capabilities to provide temporary DHPs to housing benefit claimants if there is a shortfall?
Mr Jones: I would start that answer by saying that I agree with Lord Freud that this is part of the mix of how we help people and stop them becoming homeless. £800 million, which is an increase, has been committed across this Parliament for DHP. I think we are quite clear that we do not want people to be in temporary accommodation, whether that is bed and breakfast accommodation, for any longer than six weeks. We are very clear to local authorities that it is unacceptable and unlawful to have families with children in bed and breakfast accommodation for any longer than that. What we have done to try to help the situation with temporary accommodation is that, following the changes made in the Localism Act in 2011, homeless families are now able to move out of temporary accommodation and into settled accommodation in the private rented sector, which was not the case before. As a result of the steps that we have taken in that regard, the average time that families are in temporary accommodation is seven months less than it was at the start of 2010.
Q131 Ms Karen Buck: A couple of quick questions—I think particularly for you, Lord Freud—about DHPs. Giles Peaker from the Housing Law Practitioners Association told us last week that there is case law concerning the use of DLA for calculating a household’s income when they are being determined for DHP. There is also DWP guidance on this in that it should not be used, but local authorities are still taking DLA into account when determining whether to give someone a discretionary housing payment. Should they be and what are you going to do about it?
Lord Freud: We have been quite clear in the guidance on this. Where the DLA or PIP is being spent on a specific requirement arising out of the cost of someone’s disability that should not be taken into account, but funds that are left more generally can be taken into account. It is quite explicit in our guidance.
Q132 Ms Karen Buck: Do you think that should be put on a statutory footing?
Lord Freud: I can’t see any particular benefit for it. It is explicit; people understand it and it is laid down.
Ms Karen Buck: But they are not necessarily following it.
Lord Freud: Well, it is explicit guidance as to that is where the line is drawn. DLA funds that are used and required to help with costs are not taken into account but others can be.
Q133 Ms Karen Buck: You are content that local authorities are all following that guidance?
Lord Freud: The guidance is well used. It is kept up-to-date. We consult with local authorities every year on it.
Ms Karen Buck: That is not quite the question.
Lord Freud: As you know, it is impossible for me to go and research 380 local authorities with the precision that you require for that answer, but what we are doing is we have a very active guidance process. It is up-to-date, it is renewed and local authorities are using it. So, to the best of my knowledge, yes, that will be absolutely explicit.
Q134 Ms Karen Buck: Can I ask you about another area? As you know, the benefit cap applies to many people. In fact, I think the majority of people who are not in any other aspect of social security entitlement are required to be available for work and in some cases this is causing real anomalies, particularly for carers. We have had cases, which have been discussed with the Department before, particularly where people on DLA and PIP are supposed to be excluded from the benefit cap, but they are not if they are living as a household with an adult child on DLA or PIP. Is this acceptable and, if not, what will you do about it?
Lord Freud: What you are looking at in those examples is that in benefit terms they are two households.
Ms Karen Buck: Yes, but they are not.
Lord Freud: But in terms of the amount of funding they can have, the formal household, which includes the disabled person, is not affected by the cap and the element of the informal household, which we treat separately, would be included in the cap. So the reality is that there are two amounts going into that informal household.
Q135 Ms Karen Buck: But in practice they are one household and, if they are in a high housing cost area, then that family with an adult severely disabled child will still be forced out of their home. Are you content with that?
Lord Freud: What we have is a process of giving discretion to local authorities in those hard cases where they have discretionary housing payments that are meant to deal with these—
Q136 Ms Karen Buck: Are you happy if they choose not to exercise that discretion?
Lord Freud: It is exactly meant to deal with the hard cases. What we have found, and why we have gone down this route and why that route has been accepted by the legal system, is that it is very hard to have specific exemptions, exclusions and requirements for all the very many different types of hard case. The flexibility of the discretionary housing payment is a much more effective way of going to where you have a hard case and a problem.
Q137 Chair: That depends on the size of the budget, doesn’t it, David?
Lord Freud: Yes, absolutely it does, and we have been fine tuning the budget carefully. There are two things happening. As you put in new things, people have to adjust, so you need to have more funds through the adjustment process and then we can take it down. We watch that very carefully, and in the current financial year DHP has come down to £125 million but, as we put in some of the new measures, it is going to be moving up as they come in. That figure is moving up to £150 million next year and £185 million the year after and then tailing off a bit, although in the last spending review the Chancellor announced there will be some more funding going in to help those who are vulnerable in supported accommodation, as some of those measures come in. You are absolutely right in the implication of that question. We need to get the right amount of money and monitor that carefully. I accept that point.
Q138 Chair: When we went to Westminster we saw a family exactly as Karen was describing—goodness knows what is going to happen to them—with a local authority that cannot be on your list of bad local authorities, and do not have enough money to meet that family’s needs in these extreme circumstances. Should they be lobbying you about their fine tuning?
Lord Freud: We talk every year to local authorities about what their requirements are and we are consulting about how to best set up the DHP amounts and the structuring of it for the next financial year. I am hoping quite soon to be able to announce how those processes are going. It is a very important process, for the reasons that you are indicating.
Q139 Steve McCabe: There seems to be quite a dramatic variation across local authorities in the use of discretionary housing payments and the actual level of spend in particular authorities. How do you account for that?
Lord Freud: Different authorities will proceed very differently in how they respond to need. We are seeing quite a lot of very innovative approaches to that where people try to use the funding to try to help people to a permanently stable position. The bulk of the moneys are spent across the piece. We have small amounts come back every year. What is the amount that came back last year? Is it £8 million?
Pete Searle: I am not sure of the precise figure, Lord Freud.
Lord Freud: I think we had about £8 million. It is either £8 million or £13 million, which are the two figures that stick in my mind. Some money comes back if people do not spend it, but on balance the bulk is spent by the local authorities on the formula that we have established.
Q140 Steve McCabe: Do you think you have that formula right for the need in particular areas? The variation I am referring to suggests that in some areas they are virtually overspending and in other areas, as you say, they are giving you money back. That would suggest there is something wrong with the distribution formula.
Lord Freud: The formula is broken down in four ways. I am taking last year’s figures. The core element is £15 million and that just reflects the overall level of housing expenditure, which is how we change that one. The LHA is based on the 2014 proportions of LHA expenditure. The removal of the spare room subsidy is based on the people affected by that and then with an extra £5 million going to the most rural areas. The benefit cap we have allocated in the current year is based on who is affected. So it is a quite elaborate process where we go through elements. One of the key things that you will ask me on that is setting the absolute amount for each component, because that obviously affects it. We have looked at that in the past and changed those amounts as we go through. That is one of the things we are looking at in the review for the next financial year.
Q141 Jeremy Quin: There are a lot of changes going ahead to local government finance. In the transition, is it the Government’s intention to allocate a specific pot, an identifiable pot, for local welfare assistance to local government?
Lord Freud: Do you want to take that one?
Mr Jones: Thank you for that. I will start off and I think the best place that I could start is by saying that we are currently developing our proposals in relation to the local government finance settlement. Those proposals in draft will be put out before the parliamentary recess for Christmas and will be finalised by February. I cannot really go any further than that at this point, but we are carefully considering the whole of local government finance settlement, including the issue of local welfare, in relation to the settlement that we are going to put the draft out on later this month.
Q142 Jeremy Quin: A theoretical question in that case. There is a 2% precept for social care. Could you ever envisage a situation where a precept could be added for local welfare assistance?
Mr Jones: There is a precept for social care. The reason why we have done that is that there are considerable, unavoidable and well-evidenced increases in the pressure on social care. The number of people over 75 is projected to rise around 90% to 9.9 million people by 2039 and the number of people aged over 85 by that time is projected to more than double. Local authorities in 2014-15 spent £14.5 billion on adult social care. That is nearly a third of their discretionary expenditure. This is something that in the scale of the challenge is significantly different from anything else faced by local authorities, including local welfare provision. That is why we decided to take that exceptional approach with adult social care, but we have not decided to take that approach with any other part of our responsibilities.
Q143 Chair: David, do you think there is any political motive behind this move? While there are noted exceptions, generally speaking, social care goes to our elderly constituents, whereas the fund we have been talking about now largely is going to families maybe with children. Do you not think this just reinforces the divide that the political leaders of all the parties are quite prepared to pile down on those below retirement age but are loth to do anything to that group that votes rather regularly and in greater proportion to other people?
Lord Freud: I am sure you would not expect me to agree with that.
Chair: I was hoping you would, because it is blatantly obvious.
Lord Freud: The real point here is that we have to get efficient support through to working-age people to get them into work and to run independent lives, and there is a different imperative for people who are older. What we have discovered with what we now call the local welfare provision is that we were doing that astonishingly inefficiently. The report that we wrote on the transfer to local authorities when that money went over is very interesting about how they really did tackle it. The most interesting fact that I thought, and I imagine you would have thought when you read that, was that 90% of the support that they provided for those people was not in cash but in kind. That tells you that if you really want to help people, just shovelling out money does not do the trick. You have to address their issues and try to support them.
One of the things that is now our emphasis, as we roll out universal credit, is that we have support mechanisms working with local authorities for the most vulnerable so that they can run independent, successful lives and not just be trapped in the various poverty traps and benefit traps. You taught me about this, Frank. In 1979 I wrote a feature in “The Financial Times” where I talked to Frank about the poverty trap and the benefit trap. So, thank you, because we have taken that, many, many years later, and tried to deal with those problems and you have inspired it. I am more than grateful.
Q144 Chair: I am grateful for that, but I have moved on a little bit in expanding how I see the issues. One of the Government’s real successes, certainly in Wirral, has been the troubled families unit, and I am surprised, given that you are wanting people to lead these independent lives, that before they are cast over to the bailiffs that a cooling-off period is not there and the genuinely transforming effect of tough love, through the troubled families unit, is not given to people.
Lord Freud: We are at a very early stage in a journey right now of trying to put in support mechanisms that are not about—
Chair: Sure.
Lord Freud: The Troubled Families is an area where this process is going on and we are now forming district partnerships with local authorities in other areas of support, the universal support delivered locally. We are doing a lot of trials in this area to find out what works. It is quite difficult to do, not least because you have to be able to work across a number of different groups, local authorities, central Government, and third sector. How do you share the information around that? How do you do that efficiently? I am not disagreeing with your objectives, but we are quite early in the process of building it.
Q145 Ms Karen Buck: I can’t resist saying that given that the Government are also very keen on the development of direct payments, for example for housing costs, there does seem to be a little bit of an inconsistency between an approach that is based on giving people goods instead of money on the one hand, but money instead of payment on the other. But I think we have to cover other questions so I am going to allow myself that one. I am sure you can weave something into it.
Given the big changes in 2013 and with more to come—benefit cap, bedroom tax, localisation of council tax and so forth—we are in a new environment, certainly in the modern welfare state, with people being expected to live with incomes below what the state has regarded as the minimum. That decision has been taken and then passed on to local authorities. Who do you think has the responsibility for ensuring that nobody is left with an income below that which they can live on?
Lord Freud: We need to have a benefit system that acts as an effective safety net and a system around it that helps people back into independence, or more independence, and able to run their own lives. That is the system we are trying to build between local government and central Government and that is a work that is currently in progress. I thought you might ask me the question, so I was just counting them up; I have had 25 meetings with Marcus or his predecessors in the last three years and that is a lot of what we are working on.
Q146 Ms Karen Buck: I think we have heard and seen some very good practice from local authorities in terms of integrated working and some initiatives along those lines. I do not disagree with that, but I do not think that answers the question. The question remains: who has the responsibility for ensuring that nobody is expected to live at a level below the minimum that the state defined?
Lord Freud: Where people have particular issues and where the benefit system needs reinforcing, that goes down into the local areas and there are various mechanisms, including discretionary housing payments, but most importantly to allow the local authorities to support those people as they make the transitions. But there is a difference between making a transition and just having a permanent supplement that means that you remain dependent.
Q147 Ms Karen Buck: It is not a permanent supplement, is it? What you have done since 2013 is reduce the income below what was the regarded as the minimum on which somebody was required to live. It is the absolute opposite to a supplement.
Lord Freud: If you are talking about the benefit, which is the main driver here—
Ms Karen Buck: No, I am also talking about the bedroom tax and council tax, probably even more about council tax benefit.
Lord Freud: To the extent that it is specific—and that is the important thing; you have to divide these things up clearly—it is unambiguous in the council tax context that it is the local authority. In other areas the funding has been there to help people make the transition so they can have a viable life and hopefully be independent. The subcontext is that these changes are moving people into employment and we are looking at all-time record highs of employment. We are looking at astonishing levels of employment, relatively, in areas where we have usually seen real problems. The workless households in social housing now have dropped to 39%. Even in the best times since we have had figures on that they have never been better than about 45%, 46%. That is the context in which you are asking these questions. We are seeing some real changes here.
Ms Karen Buck: Just two very quick last questions. In his evidence earlier today, Paul McGlone concluded by saying that the localisation of risk to local authorities was integral to this. When times are reasonably good for employment we will be on a steady path or even better, if you are to be believed. If there is a downturn, we have fixed sums allocated for discretionary housing and other discretion, but potentially it is a needs-driven demand. How sustainable is that?
Q148 Chair: David, you obviously know what the time constraints are. Marcus, are you thinking about the issue that was raised previously, that you did not hear but Karen has put to you, that in a good time the best local authorities are managing this transition rather well but, unless one believes one has abolished boom and bust, there will be bad times when the numbers of people needing help will increase maybe radically? Are you thinking, in your longer-term plans, about having counter-cyclical grants in this area for local authorities?
Mr Jones: In relation to the involvement of our Department in supporting local authorities, I mentioned earlier that we are doing this independent review of the local council tax support scheme as it has operated since its inception. Within that review we will consider a number of factors—the effectiveness, efficiency, fairness and transparency of that scheme—and in relation to bringing that evidence together, the type of factors that have been discussed here today may well figure in that. I think if I take it on a broader basis, because this is a challenge for local government finance in general, and certainly in the context of the business rate retention scheme that the Government have introduced, we have clear mechanisms built in to make sure that local authorities funding from business rates does not drop below a certain level. So we do think about the future and try to future-proof that. Obviously there is an implication that we will be going to a scheme of 100% business rate retention. We are currently working through that scheme and they will be the type of factors we will be considering during the development of that scheme.
Chair: Very good. I am grateful to all four of you for that session. I think you are beginning to see the sorts of recommendations we may be making to help this process, some of which has been rather good. Thank you very much.
Oral evidence: Local welfare safety net, HC 373-ii 6