HL Deb 27 April 2004 vol 660 cc757-68

7.34 p.m.

Baroness Sharp of Guildford

rose to ask Her Majesty's Government what is the impact of housing benefit regulations on those aged over 19 who are seeking to study full-time for below degree-level qualifications.

The noble Baroness said: My Lords, I am glad to have this opportunity to draw the attention of the House to the impact of housing benefit regulations on the ability of vulnerable young people in housing need to achieve qualifications below degree level. In doing so, I declare an interest as vice-chair of the All-Party Parliamentary Group for the Foyer Federation, which has asked me to raise this issue in your Lordships' House.

Many young people whose lives have been disrupted by homelessness may not return to education until they are over 19. Having been out of the traditional education system for many years, they may need to retake GCSEs before perhaps studying for an NVQ or an A-level. The current 16-hour housing benefit rule means that those aged 19 and over are unable to study for more than 16 hours a week without losing their housing benefit. That means that potentially thousands of young people are unable to gain the skills that would lift them out of a lifetime of poverty.

I should explain a little more about the implications of the 16-hour rule on housing benefit. The rule forbids those claiming housing benefit who have started a course of study after their 19th birthday from studying for more than 16 hours of guided learning each week even if they are not claiming any other benefits. This applies to all levels of learner from the basic English-as-a-second-language course to degree level study. The only people permitted to study for more than 16 hours a week while claiming housing benefit are parents or people with disabilities.

We accept that for those seeking to study at degree level or level four NVQ it is reasonable that they should not be able to claim housing benefit. University students have access to a system of income support which is intended to allow them to cover their rents without recourse to housing benefit. But this system of support does not apply to those studying at level three or below. With the business community crying out for a highly-skilled labour force at all levels, it cannot be right that young people are denied the opportunity to better their skills and benefit themselves and society from the process.

It is important to welcome the Government's publication among the Budget documents last month, Supporting young people to achieve: towards a new deal for skills. The document sets out proposals aimed at ensuring that all young people reach the age of 19 equipped for higher education or skilled employment. It also outlines possible criteria for 19 year-olds to access extended support to finish a course of learning.

A recent survey by the Foyer Federation —the UK's leading youth organisation providing the largest network of accommodation integrated with education and training opportunities for 16 to 25 year-olds in housing need— indicates that this proposed relaxation of restrictions on full-time study for those who are already on an agreed and appropriate course of study when they turn 19 would help about half of the Foyer residents who cannot currently achieve the qualifications that they want. But the other half of the Foyer's residents, those aged over 19, gain very little from the new proposals.

The Foyer Federation very much welcomes the Government's new proposals, but a recent survey highlights the fact that they will still leave many Foyer residents each year, and thousands of young people outside Foyer's, in a situation in which they cannot claim benefit and are unable to gain the skills that they need. Many of these homeless young people may not have the confidence or the stability in their lives to consider returning to education until they are 19, or sometimes into their early twenties. For these young people it is indeed a cruel blow. Having worked hard to achieve their GCSEs—often having failed them first time round because they had spent much of their final year of secondary school on a friend's sofa as a result of family breakdown or similar circumstances—they find that they are now over 19 and cannot get support to move on to full-time study for their A-levels.

One striking example of how the benefit rules have prevented an able young person from fulfilling their potential is of a Foyer resident who wanted to study his A-levels with the goal of going to university to study history. However, he was 24 and he was not eligible to claim housing benefit while studying full time. Instead, he found a job in a call centre after living on jobseeker's allowance for four months. Instead of gaining his A-levels and perhaps securing a place at university, he is now working at a call centre. The rules should really not allow for such wasted potential.

Young homeless people need more money to live on because they have to pay rent and do not receive the financial or non-financial subsidy that most parents provide to children living at home. They have less time to earn because they are managing their own households, doing their own shopping and cooking and, in many cases, grappling with the benefit system. Those young people face particular problems with housing benefit. First, it is not paid to people over the age of 18, studying full time, which is defined as 16 hours or less. That often means that in practice for many homeless young people there are only two options. One is to study full time and to earn enough to cover their rent and costs, which may approach £150 a week, making it almost impossible to combine both activities. The alternative is to drop down to a part-time course, often losing a year because of the need to start again, part-time in a new college year. By taking twice as long to achieve their qualifications, they fall further and further behind their contemporaries. The Foyer Federation's research shows that the majority of Foyer residents struggling to stay in full-time education take neither of those options. Instead, like the example that I quoted, they drop out of study completely and revert to jobseeker's allowance or to some work such as call centre work.

Last year we on these Benches welcomed the introduction by the Government of the pilot adult learning grant. Today I welcome the Government's commitment to consider rolling that scheme out nationally following the evaluation of the 10 pilot areas. However, it is important to draw attention to the inherent contradiction in the rules for the adult learning grant, which has an effect on the idea of improving the skills of young people. The grant offers an allowance of up to £30 a week to young adults on low income studying full time for a first full level 2 qualification or for young adults studying full time for a first level 3 qualification. What good news for young people—except for those who also need to claim housing benefit, as the housing benefit rules prevent them from studying full time.

That contradiction will become more intense if the Government accept the proposal of the Tomlinson working group on 14 to 19 reform, since it envisages that the diploma will require full-time study of at least 20 hours a week. I therefore urge the Government urgently to consider undertaking a fundamental review of the 16-hour housing benefit rule. The rule discriminates against people seeking to increase their earning potential, either by discouraging them from studying for qualifications altogether or by forcing them to take the slower part-time route. The federation has calculated that it costs the Exchequer in the region of £100 million a year in tax and national insurance revenue forgone on higher earnings, which some people could have achieved with those qualifications. Elimination of those rules would be good for the economy and would give many young adults a secure foothold in skilled employment and thus minimise the risk that they will slide back into homelessness, with all the social costs that that implies.

7.44 p.m.

Lord Skelmersdale

My Lords, the noble Baroness, Lady Sharp, has identified and explained the problem well. However, in my recent reading, I came across a DWP press release, which said with a certain amount of dismay that fraud and error in housing benefit is now believed to be between £550 and £750 million. That is more than half a billion pounds—a huge amount of money. No wonder I have heard it described as the worst managed benefit that there is. What efforts are the Government making to combat that, and would not quite a small amount of that money be appropriate for those over 19 as full-time students?

Since I last dealt with housing benefit, which was some 15 years ago, a lot of water has passed under the housing benefit bridge—if I may be allowed to mix my metaphors. There has been the contracting out by local authorities, which became such a shambles with late and inaccurate payments that my own local authority of Taunton Deane, and I am sure most others, have repatriated the payment scheme. None the less, I am told that there are parts of the country even now where it is routine to wait six months for a first payments. That is why one sees advertisements for rooms and flats stating "No DSS"—or, very occasionally, because the property market is a little slow in catching up with the changes in government departments, the advertisement may say "No DWP claimants".

I accept that today's debate is not really about the problems of people of whatever age who are on benefit. As the noble Baroness, Lady Sharp, explained, it is about a particular group who are not able to claim housing benefit. She has highlighted the problem of those over 19 who seek to study full time for level 2 or 3 qualifications or vocational courses and are, as a result, living away from home. The problem might equally apply to 16 to 19 year-olds at sixth form colleges and the like, as well as vocational courses such as I attended many years ago. However, at whatever age, the rules are complex in the extreme, and most students are excluded from housing benefit altogether, because in general they are deemed to be not liable to make payments in respect of a dwelling.

Clearly, those young people identified by the noble Baroness do not lit into the standard category of rules for housing benefit—the assumption is clearly untrue. The students have left home and have to live somewhere. The only rent-free accommodation that I can think of is the house of a family or friend, a squat or a pavement—the latter two of which are totally undesirable. So the great mass of students in full-time post-school education living away from home are in need of rented accommodation. Some of those students will be liable for housing benefit. I am grateful to the Erewash Borough Council for a very useful web page on this subject. Normally full-time students are ineligible for income support, for example, but a few will be. Some lone parents and student couples with dependent children may also fall into that category, as will disabled students. As far as I can gather, that is it.

It is true that City and Guilds is offering a small number of grants each year to those people studying for a City and Guilds examination, but the range of purposes for which the grants are paid does not include housing costs. A career development loan from the DfES might be appropriate, covering as it does funding for up to two years of learning and up to one year's practical work experience subsequently, when it forms part of the course. The loans are between £300 and £8,000, but interest is payable from as little as one month after the course is completed. That is hardly comparable with students coming out of university. Why is that unfairness built into the system?

Very few of the sub-degree course students will be eligible for any of those support schemes, whether housing benefit, income support, City and Guilds or career development loans. How, then, do the Government expect the great mass of the students covered by this debate to exist—on thin air? Indeed, what information does the department have on how many students we are talking about and how they exist? Part-time jobs are all very well, but I agree with the noble Baroness that they are hardly conducive to study. She has highlighted a very real problem. How do the Government intend to solve it?

7.50 p.m.

Baroness Andrews

My Lords, I am very grateful for the opportunity that the noble Baroness has created for us to discuss this issue. It is an issue of great importance for young people who are particularly vulnerable and who are trying to do their best, often against major odds. She has proved herself to be a very eloquent champion of the case that has been made by Foyer. I am delighted to know that she is the vice-chair of the Foyer All-Party Group. I understand that it is a new group. I am sure that she will be a great benefit and bring coverage to their campaigns in the future.

To an extent, the noble Baroness answered many of the questions she raised in the debate, not least by giving us a very clear account of the relationship between housing benefit and full-time and part-time student rights. As both noble Lords know, there is a historic relationship—the noble Lord, Lord Skelmersdale, has already used these words—between educational support and the benefits system, which goes far back—I hesitate to say to the origins of the welfare state—and has long-standing issues. Because the Foyer Federation supports young homeless people this is its great charge, particularly in relation to further education, training and employment.

The debate has also raised a series of questions about why young people find themselves in this position in the first place, why they drop out of education and what we can do to prevent that.

If I may be allowed, I shall take a step back and look in a bit more detail at what we are trying to do to prevent young people becoming homeless in the first place and to engage them and sustain them in education. I want to acknowledge what my right honourable friend the Secretary of State for Work and Pensions, Andrew Smith, acknowledged when he met the new parliamentary Foyer group. He recalled the fantastic work of the Foyer Federation. I think that we all want to congratulate it on the work it does on behalf of young and homeless people.

If we look at some of the root causes of the predicament, if we take the 10,000 young people who Foyer looks after and for whom it provides accommodation, Foyer and noble Lords will credit the Government for our intentions in relation to raising skills overall. We want to encourage and enable all forms of learning. Learning is no longer something that takes place in schools between 9 a.m. and 3 p.m. One of the interesting points that I came across in preparing for the debate is that the "Success for All" initiative in further education means that colleges are able to develop more flexible arrangements to enable them to deliver learning at times that are most convenient to learners, many of whom are in employment.

When we look at the historic differences between the sectors of FE and HE, the flexibility is one of the key joys. It means that an individual can choose to learn at the best time, whether in terms of age or of time of day or week. Colleges are also paying increasing attention to providing the personal support that students need if they are to complete their qualifications successfully. We want to encourage as many different, flexible and complementary routes into education and training as possible. FE is the great highway for that. But our great ambition is to move towards a better and more coherent balance of support and learning, not only for the 16 to 19 age group, but also for adult learners over 19.

This has been the Holy Grail for many governments in the past: to try to make more sense of a necessarily complex and flexible area of provision. We must start with raising the numbers staying on in full-time education. We acknowledge the scale of the challenge, as does Foyer. In its documents, it has drawn attention to the 16-hour rule and to the traditionally low staying-on rates in school. We must start there. That is the challenge. We want to make our staying-on rate at 16 among the highest in the OECD so that people reach the age of 19 with the skills that they need to succeed. Those goals are central to what we want to see for a better future. We must create the conditions and provide the support that, in the first instance, enables young people to stay on in full-time education. That means clear expectations, a clear route, a better learning offer and support and incentives.

I hope that the noble Baroness will forgive me if I say that if we want to keep young people out of the homeless condition in which many find themselves, one of the most effective things that we can do is to improve the provision that we make for children in care, who later make up so much of the homeless population. I am delighted that, in the Children Bill, we have the opportunity to put a duty to promote educational effectiveness and to improve educational standards on the statute book for the first time. We mean it when we say that every child matters. This has a direct bearing on the work of Foyer.

The next step is to engage 14 to 19 year-olds in learning with a wider choice of vocational options. The noble Baroness referred to the Tomlinson report and I hold out a great hope that, by pushing that in all seriousness, we will overcome some of the fundamental, historic reasons why so many young people have not found the academic curriculum to their liking or a success. Following that, we must provide financial support. The noble Lord, Lord Skelmersdale, spoke passionately about the situation of 16 to 19 year-olds. I presume from that that he welcomes the educational maintenance allowance system, which has been in gestation for many years and has probably been tested more widely than any other education initiative that we have tried. By its success, it has already demonstrated how important financial incentives are.

Lord Skelmersdale

My Lords, I am grateful to the noble Baroness for giving way. Does the educational maintenance allowance cover housing costs'? I know that it covers living costs but housing costs are the point at issue.

Baroness Andrews

No, my Lords, not directly. It is a benefit that goes to support young people and to enable them to stay in school. Most of those young people will be living in their parents' homes. Nevertheless, we believe that it will make a fundamental difference to the 400,000 young people who will get EMAs by 2006. It will make a fundamental difference to many of them. Some of them may be able to use some of that money to support their living costs at home.

Baroness Sharp of Guildford

My Lords, does the Minister accept that, for those who are under 19, if they are homeless and in a Foyer, they are eligible for housing benefit? The problem arises with those who are over 19 and who are not already engaged in a course of study. They are totally ineligible. While I am on my feet. I shall add that the key issue is that, with all the best will in the world, there will be some cases where young people part from their parents, perhaps through parental break-up or unhappiness at being at home, and find themselves on the street and out of education. For all that schools are trying to do to keep them, there is no way in which they can. It is vitally important to find some way of enabling such young people to retrace their steps and pick themselves up again. This is the key issue.

Baroness Andrews

My Lords. I would not dispute anything that the noble Baroness said. Indeed, I would not take issue with what Foyer has done in demonstrating its case. I think that the virtue of the EMA is that it offers an opportunity for young people to stay on in education and, perhaps, to draw back from the decision to leave, or even to give their parents some encouragement for them to stay on. That is such an essential link. At the moment, we have a cross-departmental review of financial support for 16 to 19 year-olds in which we are looking at the case for radical reform in the longer term. Over the next few years we shall see that come to fruition.

This debate is about the relationship between education and benefit support, in relation to housing benefit. There will be no surprises here. It has long been a logical principle that the education system and not the social security system should support full-time students—whether they are in FE or HE—and that income-related benefits should be provided for those in work and those unable to work. It has also long been a sensible principle that those who wish to study part-time can do so, while receiving some help through the social security system. In terms of housing benefit, our memories are quite long and if we look back to before 1990 we had the unsatisfactory position where housing benefit was available for students only during the long vacation. We can all remember the anomalous and confusing situations that that gave rise to and a cross-party consensus grew that we should address that situation and come up with something consistent and rational so that everybody would know where they were.

So in line with that general principle, since 1990 social security regulations have not allowed full-time students to claim unemployment-related benefit, income support or housing benefit. As the noble Baroness said, the DWP regulations define full-time learning as more than 16 hours per week. Also, the Secretary of State himself said in that briefing that the aim of that rule was to encourage individuals to work to earn enough not to need benefit while studying part-time. We continue to feel that that rule serves an important purpose. It allows a useful flexibility; it allows a range of choices.

To that extent, I cannot give the noble Baroness the satisfaction that she seeks on that issue. The noble Lord has identified some of the groups—full-time students, disabled people, couples with dependent children— who are in those categories of people who can claim. It is important that they should be able to do so.

However, I would not want the noble Baroness or the noble Lord to leave the debate thinking that we are in any sense complacent about the matter. We are conscious that young people trying to grasp what may be a second chance by investing in those fundamental qualifications deserve encouragement and support. The diversity of further education is a considerable source of strength in many ways.

I can give the noble Baroness and the noble Lord some figures—although not all of them. I fear. There are about 3.9 million learners in further education; 3.5 million of them are taking courses that lead to qualifications. I shall go hack to the department to see whether I can obtain figures on the lines that the noble Lord seeks. I know that it is a rather murky area statistically, but I shall see what I can come up with.

Again, we are definitely not complacent and recognise that the 16-hour rule, whereby income-related benefits should be provided only for those in work or unable to work, can and is creating difficulties for some people wanting to study for more than those hours. The situation is being monitored by the DWP. That is exactly why the DWP and the DIES are working together in the context of the New Deal for Skills to streamline and improve the arrangements to support those in learning. So the situation is very much in our minds.

However, in the mean time, we are doing what we can in other ways to raise the income of people—very vulnerable people—whom we want to keep in education. To support homeless students who are in FE, we have increased the extra funds, the disadvantage uplift, which goes to colleges for such students, from 12 to 14 per cent. So we are putting resources directly into colleges to enable them to provide extra for those young people.

The noble Baroness mentioned the overall skills strategy. Yes, we placed a clear emphasis in our paper in July last year on ensuring that training is available. Employers have an increasingly important role to play in the skills strategy but the New Deal for Skills also specifically aims to ensure that those who start training when they are out of work can continue when they are in a job. There is a very important link to be made.

In addition, I understand that employer training pilots are now running that encourage employers to invest in skills and qualifications, especially for low-skilled trainees. About 48,000 are in that category. The important point is that people need to know about it. A huge element, which I am sure that Foyer has picked up on, is that what is important is not financial support for learning but the right advice and direction— correct information about the options; how people go about accessing them; and so on.

A new statement of basic service standards for advice and guidance was published before Christmas and the Learning and Skills Council will in future contract such partnerships on a more rigorous basis to secure delivery of those standards. We want through the New Deal for Skills to reconfigure the service and re-contract against much higher service standards. That will mean better information and advice, strengthening the links between the agencies. That is very important for those young people, who need to know what are their choices.

The third aspect of the strategy—again, already referred to by the noble Baroness, Lady Sharp—is about supporting people directly and financially. The Adult Learning Grant has been successful. The pilots have shown improved retention. It was piloted in nine areas of deprivation and low skills for those with low salaries and aiming for levels two and three. That means that for the first time, there will be help for five good GCSEs and two good A-levels or their equivalent. Throughout this year, there is a significant roll-out in the south-east and north-east. That is interesting and it is important that we monitor what goes on.

The extension of the grant—I know that Foyer welcomes this—requires attendance of only 12 to 13 hours a week. That should enable increasing numbers of Foyer residents and others with low skills to get the building block qualifications to move into work. I also understand that the Foyer Federation is in discussion with DfES officials about ways to help more Foyer residents access that grant. The noble Baroness will probably also know about the £95 million that is going into the Learner Support Fund. That has been available since 1999 It is for basic things: travel, books, equipment and childcare. Significantly, that has a high take-up; we are seeing the benefit of those funds available in colleges on a discretionary basis.

I should also mention the basic skills strategy, which is addressing the problems of 7 million adult illiterates—so many of them connected with the problems that create homelessness. That is the end strategy for those adults.

Before concluding, I shall address the point about housing benefit. Tempting though it is to follow the noble Lord down that road, I shall not, except to say that we have made some progress since the housing benefit reform programme was launched in October 2002. The publication of the benefit performance standards for housing benefit and council tax was supported by a £200 million fund over three years to help to meet new standards. The average time taken to process claims has improved by 5 per cent since 2002–03.

On fraud, we are the first Government systematically to measure loss in the housing benefit system. We have set a challenging target to reduce fraud by 25 per cent by 2006, so no one can accuse us of not at least measuring the size of the problem and trying to do something about it. We are also taking steps such as the verification framework to ensure that benefits are paid to the right person at the right time — which is extremely important. So we are well aware of the challenge of housing benefit and the importance of simplification.

Let me conclude by simply reiterating our unequivocal commitment to the enabling of young people, especially those who have had an uncertain and often unhappy start in life, to equip themselves with the skills that they need. It is essential to our social and economic ambitions. Skilled workers can master change; they can seize the opportunities on offer and defend themselves against poverty and poor health, and can have wider choices and safer lives. I recognise with great sympathy and personal interest many of the points made by noble Lords this evening. We have taken and are continuing to take steps towards building a more coherent and sensible system in which young people can thrive and which helps through the right sort of financial support at the right time, to keep them continuing and successful in their learning. I am sure that noble Lords will continue to watch and support the work of Foyer, as will we all.

In case I have not replied to points of detail in the time available, I shall be sure to scrutinise Hansard and make sure that noble Lords get fuller answers if necessary. I am very grateful to the noble Baroness.