Credit Unions

Lord Kennedy of Southwark Excerpts

Thursday 2nd February 2012 Lords Chamber

Asked by

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what action they are taking to promote the accessibility of credit unions.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, the Government wish to see greater diversity in financial services, and credit unions have an important role to play. The recent credit union legislative reform order has opened up membership to different groups such as housing association tenants and employees of national companies working in credit union areas. A feasibility study has looked at how the Government could support credit unions. The study reported to Ministers in December and an announcement will be made in due course.

[Lord Kennedy of Southwark]

Although progress is moving in the right direction, I think it is extremely sluggish. If I asked a question about nurses, I would expect a Health Minister to reply; if I asked about teachers, I would expect an Education Minister to reply. I ask a question about credit unions and three departments could reply in this House. I contend that that is not joined-up government. My question for the Minister is: who is the driver?

[Lord Freud]

My Lords, I am the driver. I commissioned a report on credit unions last year. The DWP is the paymaster for the credit union movement. We have spent £113 million in the past six years. We are determined to go on funding this really important element of financial inclusion and to create an industry that will be viable in the long term and will support the poorest in our society.

Welfare Reform Bill

Lord Kennedy of Southwark Excerpts

Tuesday 1st November 2011 Grand Committee

Moved by

[Lord Kennedy of Southwark]

51G: Clause 30, page 15, line 15, after “sections” insert “11 and”

[Lord Kennedy of Southwark]

My Lords, when I spoke at Second Reading, one point that I made was my deep concern that there could be considerable problems, considerable hardship caused to people if changes were made that were not thought through properly. Many noble Lords who spoke at Second Reading and who have spoken during Grand Committee have been clear about their support for the principle of universal credit, and I am one of them.

The noble Lord, Lord Freud, will be aware that I have asked a number of Written Questions on these matters. My amendments in this group are intended to ensure that there is some form of piloting of the proposals, so that we can assess their effect and make informed decisions having looked at the reality of what is happening on the ground.

I still have considerable concerns, but I was very pleased to see, first, the Minister himself opposing the question that Clause 30 stand part of the Bill and then the amendments he has tabled; Amendments 56A and 69A. It would be very sensible if we moved on to consider those and probed the Minister's proposals in this group. They are a welcome step in the right direction. I thank him for that and I am very pleased. They may need further refinement, and I am sure that we will have more to say about that in Grand Committee and at Report on the Floor of the House.

I leave it there with a view to quickly getting on to the Minister’s proposals. I am sure that that is what the Grand Committee wants. I beg to move.

[Lord Freud]

My Lords, we will ensure that the full universal credit system is extensively tested with claimants before the new benefit is introduced. However, this will not take the form of a pilot scheme as this would add extra costs and delays to the introduction of universal credit. It is vital that we are able continuously to test, improve and evolve the universal credit system after it is introduced. It is key element that we should have the flexibility to respond to change and ensure that the system does not stagnate while the world develops around it. The amendments I tabled will achieve this constant evolution.

The original wording of Clause 30 provided for piloting measures only to see if they would improve a claimant's chances of entering work, or of finding more or better-paid work. While this is a key objective, universal credit will also simplify the benefits system, improve work incentives and change behaviour. Amendments 56A and 69A will ensure that we are able to test approaches that cover these wider principles.

If we are to ensure that we have the flexibility to develop and continuously improve universal credit, we must ensure that piloting can also include the testing of changes to the structure, design and delivery of the benefit. The ability to run controlled pilots of tests—for example, of whether advances in technology could improve the structure or delivery of universal credit—will be a fundamental part of the evolution of the benefit and of its ability to remain responsive to claimants' needs.

I will add that the inspiration for this measure came from thinking about what happened to NHS hospitals when they were brought into state control in 1948. Their service levels were almost frozen. It is vital, with a big state system, constantly to move, change and evolve it. This is the mechanism to ensure that we have a responsive system. If we do not have this kind of power, we could find ourselves with a system that is perfectly in tune with what we require in 2011 but by 2030 is absolutely out of touch with what society needs.

I recognise that any pilot must be transparent and timely, which is why the clause includes a number of safeguards. For example, we have time-limited each future pilot scheme to three years. Through Amendment 69A we will ensure that any pilot regulations will be subject to the affirmative resolution procedure. I hope that noble Lords on all sides will support this enthusiastically, and I urge the noble Lord to withdraw his amendment.

--- Later in debate ---

[Lord Freud]

I think that I had completed everything I need to say about these piloting powers and ask the noble Lord to withdraw his amendment.

[Lord Kennedy of Southwark]

I thank the Minister for his response. As he says, it is important that we are able to respond to changed situations—that certainly is progress—but we still have some way to go. I agree with the comments made by my noble friends Lady Hollis and Lady Hayter, and by the noble Lord, Lord Boswell. The integrity and transparency of the process is paramount. As noble Lords have said, it is possible that what comes back will not support the aims or proposals of the Government. With that, I beg leave to withdraw the amendment.

Amendment 51G withdrawn.

Welfare Reform Bill

Lord Kennedy of Southwark Excerpts

Tuesday 13th September 2011 Lords Chamber

[Lord Kennedy of Southwark]

My Lords, as noble Lords on these Benches have said, the Opposition support many of the broad principles in the Welfare Reform Bill. On the face of it, these Benches could agree with many of the opening remarks of the noble Lord, Lord Freud. Universal credit is a welcome simplification of the benefits system. We all want measures to support people getting back into work, we support sanctions for people who persist in refusing to look for work, and we can support careful, considered reform of disability living allowance. All these reforms can build on the actions the Labour Government took to make work pay.

However, the Bill is a lost opportunity for real progress. I sincerely hope that the noble Lord, Lord Freud, is in listening mode. These Benches have major concerns about how the reforms have been proposed and the negative effect they will have on the living standards of millions of families and children. The Bill is not clearly thought through and in reality is an attack on family budgets which will have billions of pounds taken away under a smokescreen of reform. I hope the noble Lord, Lord Freud can explain why the Government have chosen to bring forward legislation which is so light on detail. Would it not have been better to wait and detail the proposals more clearly? We all want to get people quickly back into work, but to achieve that you need some jobs for them to get into. Failure to provide realistic opportunities for employment throughout the UK will mean that unemployment levels will rise and the welfare bill will be difficult to rein in.

Noble Lords will recall that we have been here before. It is very simple. If we can get people back into work, that will reduce welfare costs, but the Bill does not help in that regard either. The number of people chasing each vacancy can vary greatly, but even in areas that have more jobs on offer, you can be looking at one person chasing every five or six vacancies. So I worry that the Bill just does not take into account the reality of the situation people can find themselves in but instead takes a blinkered view.

There are a number of other issues. As the noble Lord, Lord Best, said, direct payment to claimants is not always in the interest of the benefit recipient. There is much to be said for payment to providers on behalf of the claimants. We have to recognise that people sometimes struggle to keep a grip of their household budget. Rising prices and the change in benefit rates from RPI to CPI all add to pressures on families. With direct payments of benefits into bank accounts, have the Government considered the problem of banks levying charges when account holders are overdrawn and recovering them as soon as funds from the DWP appear in the account? Charges taken direct from the claimant’s account will mean people will have even less money with which to meet their obligations. How will that help a family which is struggling to make ends meet?

As my noble friend Lord Knight of Weymouth said, proposals to remove local authorities from administering the housing benefit elements of universal credit need detailed scrutiny by your Lordships’ House. At present, the proposals run the risk of not saving money but actually costing more and increasing hardship and worry. At present, local authorities have achieved a high level of performance, which has reduced errors and speeded up claims. Should the Government not be allowing more localisation and less centralisation? The Institute of Revenues, Rating and Valuation, in evidence to the Department for Work and Pensions, urged the Government to listen, take a realistic approach and use local authorities in this regard. They have a track record of delivering and have the necessary skills and expertise. Can the noble Lord, Lord Freud, tell the House how a reformed administration of the system, overseen directly by the Department for Work and Pensions, will improve on the situation at present? How does the noble Lord envisage that measures to mitigate risks in the change will be implemented? What will be the process for the DWP to start a new claim? Will all new claimants be expected to send all their documents to the DWP? What if documents go missing? How will the new system mitigate against fraud? Does the Minister not understand the problem that over or underpayment will cause to claimants, as people seek to budget effectively?

Often housing benefit services are combined with council tax benefit and other benefits as part of a general benefit service. Can the noble Lord, Lord Freud, confirm that these local authority contracts will be allowed to run their course and local authorities will not be placed in the invidious position of having to seek to end these contracts early with all the resultant expense that that will entail. At this stage, I fail to see how not allowing local authorities to retain responsibility for administering the housing benefit element of universal credit is not a good thing. The system is administered well. If we move away from that expertise, the Government must put in place protections for people so that they are not disadvantaged and the situation made worse by this change.

In conclusion, I ask the noble Lord, Lord Freud, where the Government took soundings from before they brought these proposals to Parliament. Did they look at how systems are operated abroad? If they did, which systems did they look at? Much could be done with this Bill if the Government are prepared to listen and to work with noble Lords. There could be much merit in these proposals, but the devil is in the detail and the consequences for individuals and families on the lowest incomes appear to be grave indeed.

Housing Benefit

Lord Kennedy of Southwark Excerpts

Tuesday 3rd May 2011 Lords Chamber

Asked By

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government what are the implications of housing benefit reform for the geographic distribution of low-income families.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, our published impact documents specify average losses by local authority. We expect that a very small proportion of people may have to move as a result of the housing benefit reforms, with a minimal impact on the geographic distribution of low-income families. My department has commissioned a consortium of leading research organisations to comprehensively evaluate the effects of recent local housing allowance changes. Further information on that will be available from the Library today.

[Lord Kennedy of Southwark]

I thank the Minister for his response. Does he agree with me that the success of UK cities is that people from all walks of life live and work together and that introducing a policy that forces low-income families to move to the suburbs, as happened in Paris, would lead to alienation and social unrest and contradict the Government’s belief in the big society?

[Lord Freud]

My Lords, the comparison of London with Paris, which has been made quite widely, is very misleading. The structure of London is very different from that of Paris. London is made up of a collection of villages and is quite unlike the doughnut of Paris. I would not agree with that assertion.