HL Deb 15 June 1994 vol 555 cc1788-808

9.5 p.m.

The Countess of Mar rose to ask Her Majesty's Government whether they will amend the Social Security Contributions and Benefits Act 1992 to introduce a regulated payment for the purchase of essential items of furniture and household equipment, payable to those homeless people who are setting up house and who do not possess such items.

The noble Countess said: My Lords, this Question was originally tabled by my noble friend Lord Henderson of Brompton. Unfortunately, he is unwell and unable to be with us tonight. I am sure that all noble Lords will join me in wishing him a speedy recovery and that I will not be wrong in saying that we shall all miss his contribution.

Noble Lords

Hear, hear!

The Countess of Mar

My Lords, it is the Government's intention that beggars should be removed from the streets into their own homes; that families in bed and breakfast accommodation should be permanent-ly housed, and that those who are recovering from drug or alcohol dependency be encouraged to be independent and living in suitable accommodation.

We know that the Department of the Environment, together with local authorities, housing associations and voluntary organisations, have worked together at the cost of many millions of pounds to provide suitable housing for the homeless. Why then is it that the Department of Social Security does not support the initiative with sufficient funds to provide essential furniture and household equipment for prospective tenants?

My Question is specifically about grants to homeless people who are being resettled or settled in accommodation of their own. Most will have no household possessions. They will have an inability to save from their social security benefits and they will have no means of obtaining credit with which to purchase essential goods. The failure of the Social Fund to meet Ministers' often-stated objectives of concentrat-ing help more effectively on people facing the greatest need with specific, exceptional and large expenses has been debated and questioned in your Lordships' House on many occasions since the Social Fund replaced the supplementary benefits single payment scheme in 1988. I assure the noble Lord the Minister that I am not asking for a return to that system. I ask him not to resort to comparisons between the old scheme and the Social Fund as he and his predecessors have been prone to do when challenged about the effectiveness of the Social Fund and its ability to meet its objectives. What I am asking for is a grant which is deliberately designed to fit into the Social Fund. I remind the noble Viscount that one element of the fund allows for non-discretionary maternity payments which at present are £100; funeral payments to cover the basic cost of a funeral; and cold weather payments which are currently £6 a week.

CHAR, Homeless Network and the London Homeless Forum in their report The Bare Necessities, published last month, list the four areas giving rise to the greatest concern about the operation of the discretionary element of the Social Fund as the inconsistency of the decision-making, the preponderance of awards of loans over community care grants, the lack of an independent right of appeal, and cash-limiting.

In March 1992, the Social Security Advisory Committee, in its report The Social Fund—A New Structure, concluded that: The present structure was aimed at producing flexibility and a response to local needs, but in practice, has produced inequality of provision and availability. In July 1992 the Government, in their own research into the Social Fund, stated: We cannot show that those who got [Social Fund] awards were in greater need than those who did not; nor can we conclude that the Social Fund is meeting its objective to 'concentrate help on those applicants facing greatest difficulties in managing their income"'. The Social Security Advisory Committee also found that although the scheme, provides flexibility, it also creates a situation that has been described by some critics as a 'lottery', in which applications may be accepted or refused according to the state of the local budget. An application may be refused in one area which could succeed elsewhere or be refused in a given month but may be accepted by the same office at some other time of the year". In response to the Social Security Advisory Committee's criticism of the inconsistency of the Social Fund, Mr. Nicholas Scott, the Minister for Social Security and Disabled People, said: 'This is the price to be paid for flexibility". That remark is a damning indictment when one considers that in 1992–93, 85 per cent. of applications for community care grants were refused together with 46 per cent. of applications for budgeting loans and 16 per cent. of those for crisis loans. Three-quarters of the applications for grants were for basic furniture and household items.

Criticism comes not only from the Social Security Advisory Committee and the voluntary organisations; 77 per cent. of Benefits Agency staff (from about 100 offices) who are responsible for administering the fund stated that the fund had got worse recently, according to The Bare Necessities report. The new "Directions and Guidance" are causing particular difficulties for Benefits Agency officers when they are assessing applications from single people. Direction 4 states that applicants must show that they have received, a significant amount of care or supervision for the first part of the direction to be satisfied. That is particularly difficult when they move from high to low dependency hostels as part of a rehabilitation programme. As single people, they also tend to be low on the list of priorities.

Staff are frustrated by the inconsistencies, mainly those inherent in the cash-limited and discretionary scheme. The problems are widespread. Recently commissioned research by the Department of Social Security found that, although Social Fund officers tried to be fair and to apply the relevant directions and guidance, their discretionary decisions are shaped not only by the needs and circumstances of the applicants but also by their own personal perspectives and by certain aspects of local office administrative practice and constraints". Administration of the Social Fund is both cumbersome and complex. A high proportion of applications go to review after being turned down initially. Very few applicants are awarded the full amount for which they apply. The process is stressful for both the applicants and the officers who must decide who gets what. It is the most expensive benefit to administer. Administration costs in 1992–93 were 45.2 per cent. of benefit expenditure. The evidence shows that instead of reaching their target, Social Fund community care grants, crisis loans and budgeting loans are failing to help those at the bottom of the ladder. In simple language, the scheme is not working.

There is a viable alternative. Both the Social Security Advisory Committee and the voluntary organisations which work with the homeless agree that there is a crying need for what they term a "start-up grant". That would be a non-discretionary payment based on the needs of the applicant. It is recognised that a single person moving into an unfurnished bedsitter would not need the same furniture and household equipment as a couple with children moving into a house.

In 1992 the Social Security Advisory Committee suggested that there should be a single grant of about £900 payable to all homeless applicants in receipt of income support who are offered permanent accom-modation of their own. Although I recognise that that would greatly simplify the administration of the Social Fund, I believe that a system of item-based payments would be seen to be fair and would provide the necessary flexibility. I have not costed those proposals. I know that the noble Earl, Lord Russell, will speak about the costs, particularly the hidden costs.

If we are to get people out of their cardboard boxes, bed-and-breakfast accommodation and hostels, we must ensure that the alternatives, their own homes, are provided with the bare necessities. Too many homeless people offered accommodation either move into a house with bare boards and very little furniture or get themselves into the downward spiral of debt and despondence in their efforts to make a home. If they are to regain their confidence and self-respect, we must accept that they need some help to start them off, and that the help should be adequate.

The visible costs may be a little greater but the savings from the current hidden costs may very well balance them. I ask the noble Viscount the Minister to ask his right honourable friend the Secretary of State to consider seriously all the reports which I have mentioned and which other speakers will mention. Will he conduct a proper cost-benefit exercise accurately to determine the most effective and efficient way to provide the bare necessities for those homeless people who are offered permanent accommodation? This could well be their first step towards reducing benefits dependency.

9.15 p.m.

The Lord Bishop of Ripon

My Lords, I join the noble Countess, Lady Mar, in wishing a speedy recovery to the noble Lord, Lord Henderson. I am grateful to her for speaking to this Question most ably.

Since the Social Fund was set up, clergy and congregations, in particular in large city areas, have had opportunities to have direct experience of its effects. Indeed, as long ago as February 1989, the General Synod passed a resolution stating: That this Synod, conscious of the concern of many clergy and lay people at the likely effects of the Social Security Act 1986, and in particular … the burden of extra debt which will be borne by those in receipt of loans from the Social Fund … the strain that will be put upon national and local charities; and … the increasing work-load upon debt counsellors and other voluntary agencies, asks the Government to review the workings of the Act after twelve months". A number of reviews have been made and the noble Countess has referred to them. Reading those reviews, it seems to me that, broadly, there are two difficulties with the Social Fund. The first is that it is cash limited and the second is that loans and not grants are made available. The difficulties have already been outlined by the noble Countess, but perhaps I may repeat them.

One difficulty is that there is no evidence that those who receive awards from the Social Fund are necessarily in greater general need than those who are refused. The noble Countess used the word "lottery" in relation to this. The whole intention of the fund was to focus help on those applicants facing the greatest difficulties in meeting exceptional expenses. It is clear that the operations of the fund have not enabled this to happen.

A second difficulty is that the Social Fund applicants are not treated equally, irrespective of where they live or the time of year at which they seek help. There are differences. I do not lay any blame at the door of Social Fund officers, who work extremely carefully to ensure that the fund is fairly administered. However, it is very difficult to apply criteria across the country when individual discretion is being exercised. An experiment in which 15 Social Fund officers assessed six identical applications under identical conditions was carried out. There was no application on which all 15 officers came to the same decision. That underlines the point that has already been made about the fund being something of a lottery.

The other basic criticism is that the money comes in the form of loans and not grants. That is bound to produce a great difficulty for those who are already on a basic income. Those who are given loans accept that the rate of repayment is not unreasonable, but the difficulty is that it does not leave them enough to live on. According to the report, more than one-third of loan recipients, including pensioners and families with children, had to cut back on their spending in order to repay the loan by going without other things—most often food and clothing—or by failing to pay other bills.

The General Synod Board for Social Responsibility supports the recommendations made by the SSAC, in particular that there should be an extension of mandatory grants to cover needs relating to setting up home, taking up work, domestic emergencies and the provision of a bed for a young child. The Board for Social Responsibility believes that provision should go beyond this towards a progressive move to give grants for all high priority items.

As the resolution to which I referred hinted, it is clear that the charities cannot now cope. There are in Leeds, which falls in my diocese, two Church-sponsored furniture stores which have been operating with an enormous amount of local voluntary support. They provide some needs, but a recent survey showed that they provided nothing by way of electrical goods—what are now being termed white goods —and there is a great difficulty in that respect. Clearly, those are essential items, but if they are not provided through the Social Fund, and if it is not possible for charities to provide them, there is clearly a risk that faulty or possibly dangerous equipment will be used.

Often those who are in this situation looking for help are people who for one reason or another have left home. Many of them end up in our big cities. The charity Night Stop in Leeds has a particular responsibility to try to provide help for those who are homeless, giving them overnight accommodation and helping them to set up home. Such people have no natural social network from which they can receive help. Indeed, we have a further project in order to provide some kind of friendship support for them. But it is clear from the support that they have around them that essential equipment is simply not available. In those circumstances, it seems right that we should look to the Government to provide that which simply cannot be provided from other sources.

I should like to raise one other matter; that is, the problem of tenancies. As your Lordships know, in order to take up a tenancy you are required not only to pay rent in advance but frequently you are required also to put down a deposit. It is clear that homeless people in the sort of situations that we are talking about are not able to find that kind of money. In the light of that, much work has been done on rent guarantee schemes to enable money to be found immediately, which will in due course be repaid by those involved. I understand that the Government have funded a number of those rent guarantee schemes. Perhaps I may ask the Minister whether on the basis of that experience the Government are willing to consider funding such schemes on a national basis or perhaps introducing a national scheme.

It is clear that poverty is on our doorstep. In your Lordships' House this afternoon we are discussing the problems of poverty worldwide and we were not unaware of those more immediate problems. The arguments used earlier this afternoon apply also in this case: this is a moral situation which requires a humanitarian response; but it is also a situation which, if it is allowed to continue and fester, will produce much bitterness, anger and quite possibly conflict.

Much local work is being done. I am full of admiration for those charities which are working in that field. But it is clear that they need help from the Government to enable such support to be effective. I hope that the Minister will consider providing that help.

9.22 p.m.

Lady Kinloss

My Lords, I would like to join my noble friend Lady Mar in sending best wishes for a speedy recovery and a return to this House of my noble friend Lord Henderson of Brompton.

Now that we have, hopefully perhaps, a few weeks of warmer weather, it might be a good time to study the needs of homeless people—a single person or a family —in helping them to move into a house or a flat. Having, with luck, arrived at a position of having been awarded a house or a flat, there is the question of furniture, just even the basic needs: such items as a bed or beds and a cooker. I am often told that an important item such as a cooker is a basic necessity. I agree entirely with that, but no one has ever said at the same time to me that they need saucepans and hopefully a kettle at the very minimum, and of course plates, cups and cutlery as well. Can the Minister imagine trying to boil water in, for example, an old Coca-Cola tin for a family?

The Social Security Advisory Committee, in its 1992 report, recommended start-up grants for those setting up a new home, or moving from institutional care, or in domestic emergencies. It recommended the payment of non-repayable grants. Perhaps if those asking for a start-up grant were asked to itemise their needs, it would help them to get a grant for those necessities which they really need.

Setting up home is an expensive task, and even more so for homeless people. Many of those homeless people, some of whom have come out of care, have no furniture or other household essentials. A young person who has been in care is unlikely to have either furniture or other basic necessities. Many of those people are reluctant to accept a loan in the realisation of the hardship that they are likely to face due to the high repayment rate of Social Fund loans. Therefore, those who have no basic household goods should receive a non-repayable grant as soon as possible.

Although it is often difficult, and not really possible, to pinpoint the precise cause of family breakdown or placing someone at risk, the inability to set up a home with basic necessities has been found to exacerbate existing difficulties and can lead eventually to a total breakdown of family life.

This is the International Year of the Family. All recent social policy has been underpinned by an emphasis on the importance of family life. The aim of the Children Act 1989 is to ensure that children and young people in need are provided with the necessary support, preferably within the family, or, otherwise, in an alternative appropriate environment. Too often, the stress that can be caused by making do, or doing without, triggers family tension and strife. Does the Minister agree that an adequate grant to purchase basic necessities is essential to help prevent family breakup, and so ensure that children have a healthy environment in which to live?

The National Association of Citizens Advice Bureaux reports cases of great distress. I should like to mention just one case of an elderly woman who was offered a loan to replace a heater and a cooker condemned by British Gas. She did not take up the offer as she knew that she would not be able to live on her remaining income after repaying £6.67 per week for the loan. Let us think of the disaster that could have been caused by the condemned cooker. Surely that sort of offer is a case that needs looking into if a future disaster is to be avoided. I cannot think that the Department of Social Security would want such a disaster on its hands.

There are some private individuals in this country who are buying up surplus Army supplies, such as an armchair for £2, a sideboard or desk for 50 pence and other things needed in a home. Perhaps I may ask the Minister whether he will inquire into the matter, and see whether the Ministry of Defence and his department can come to an agreement whereby surplus furniture, cutlery, china, glass and other household items can be obtained at a special low rate? Those items could then be allocated to the correct authorities for distribution at a low cost to those people who are in receipt of grants for setting up home for the first time, especially where there are small children. If the noble Viscount is unable to answer tonight, perhaps he will write to me on the matter.

I should just like to mention that citizens advice bureaux in Scotland report much the same problems as are found in England. In one case, a report by a CAB in Scotland tells of a single parent on income support. Following the birth of her baby, she has been rehoused by the local authority. She applied for a community care grant to furnish her home and was refused on eligibility rules. She was eventually awarded a crisis loan. Somehow she will have to repay that loan. That seems to me to be a complete waste of money. The local authority rehouses the single parent with her baby, but the Benefits Agency refused her a community care grant. What, I wonder, does the agency expect this young mother to do with her baby? This would seem to me to be a situation which is very tragic and high in human suffering; it is also high in financial terms. I look forward to hearing the Minister's reply.

9.27 p.m.

Earl Russell

My Lords, in thanking the noble Countess, Lady Mar, for introducing the Unstarred Question, I am sure that I speak for every person in the House save one. However, in agreeing with the noble Countess in offering our sympathy to the noble Lord, Lord Henderson of Brompton—and I regret that he is not present on this occasion—I am sure that I speak for every Member of the House, not excepting one. In his speech to the Carlton Club, the Prime Minister said that the purpose of the social security system was a hand up not a hand-out. We on these Benches might want to qualify and elaborate that statement here and there; but we have no quarrel whatever with its basic message. We accept the objective, but we think that the benefit system is at present a long way short of meeting the Prime Minister's objective. Accepting that proposal might make the benefit system a little closer to the Prime Minister's aim.

I am concerned—though not, at present, quite as concerned as the Government—about the size of the social security budget, but I will plead that I have been concerned about it for a great deal longer than them. I have been concerned about it ever since I took over this brief in 1989. The right way to reduce the social security budget is, as the Prime Minister suggested, by giving people a hand up, and by helping them over the effects of misfortune so that they can be restored safely to the world of work and get over whatever misfortune or trauma has put them in the position they are in, and get back to business as usual. The wrong way of reducing the social security budget is to kick people off the ladder back into the water.

It is, I think, true for most of us who are trying to recover from misfortune that there is a tide in the affairs of men, but to catch that tide we need a fair wind. If we do not get the fair wind and we drift in shallows all our life, then we tend to do it, in one way or another, at great expense to the state—not only to the Department of Social Security but to a good many other departments as well. In particular, if we get pushed back into the cycle of recurring homelessness, we create costs all the way along the line. Therefore one reason why the Government might consider this proposal very seriously is that if they look at the costs in the round, I think they will find it a great deal cheaper than any likely alternative.

I will be referring in due course to a number of individual cases. I will not do so merely as an appeal to the emotions. I will ask the Minister to consider in each of those cases: what is the alternative, and is the alternative cheaper or more expensive than the proposal that we have before us? Setting up house is widely recognised as a moment of great and exceptional expense—a moment when, as the right reverend Prelate said, there is a need for a support system. That is why those of us in more fortunate positions expect, when we first set up house, to receive wedding presents. That is a practical support system which is not normally open to the people with whom we are now dealing.

The concern, on moving into new premises, that there should be furniture, extends much further up the social scale. In 1572 the then Bishop of Norwich arrived very late for the beginning of Parliament and explained to one of his brother Bishops that the reason for his delayed arrival was that he could not find anywhere to live. He had been offered one place, but he said, "She was a great enemy to religion, and besides there was no furniture".

Like the noble Countess, I shall not go through all the defects in the Social Fund. We have done that before and we will doubtless do it again. However, I shall touch on one or two cases in which the rules of the Social Fund operate to the detriment of applicants and, I believe, to the detriment of public funds. One is the eligibility rule —one has to have been 26 weeks on income support before one can apply. Let us take the example of a case reported by Barnardo's of a man aged 23—a care leaver —who had spent a period in a psychiatric hospital. He was refused the loan because of a period of interruption in his benefit while he was on remand, even though the case was dropped and he was released from remand. That person, not getting help when he needed it, could perfectly possibly have ended up either back in the psychiatric hospital or on remand, this time for something that he did do. Neither of those things would be to the advantage of the Exchequer, any more than they would to the person concerned.

We have problems as regards those who are found by the Social Fund to be too poor to be eligible for a loan. I will ask the noble Viscount the question that I have asked before—I am still waiting for an answer—what is the justification for a rule that rules that people are too poor to receive help from the social security system? How can that be found to be consistent with the basic purpose of the system?

There was the case of a 22 year-old man who had spent extensive periods in social services care and served a custodial sentence of 27 months. When failing to receive any help at that stage he suffered outbreaks of aggressive behaviour at probation and benefits offices and was in danger of breaching the terms of his probation order. One can see the danger of increased spending there. Finally, he was successful, with help. His advisers reported that his mood and motivation improved enormously—with the prospect, of course, of considerable savings.

We then have the problem of eligibility under Direction 4. A remarkable proportion of applications for community care grants from the Social Fund are found ineligible because they are not within the scope of Direction 4. Direction 4 provides that the money can be used to assist people leaving residential or institutional care to live independently in the community, to help people stay in the community rather than to enter care, and to ease exceptional pressure on families—not on the single homeless. Homelessness is not regarded as ipso facto exceptional pressure in relation to the Social Fund. That is a pity. In June 1992 the guidance for the first rule was tightened. People must now have received a significant amount of care or supervision before they qualify.

Those have been described as slippery definitions. I could not help noticing, looking at returns from the Social Fund as regards a number of areas of the country over a considerable period of time, that the percentage found contrary to Direction 4 was remarkably constant. I cannot resist the suspicion that the interpretation of Direction 4 is being used as a form of impromptu quota system. I hope that the noble Viscount can deny that. I shall listen to the denial, if I receive one, with great care.

The homelessness circuit is not a good thing to be left in. It is important for us, as well as for the homeless, to lift people out of it as soon as possible. That moment of suspense, the moment when one first tries to get into one's own place, is a moment of maximum hope and therefore, as a consequence, a moment when one is most liable to disappointment.

What we propose is a regulated payment. By ruling out the element of discretion, the administrative costs would be much reduced. As the noble Countess pointed out, those amount to 45 per cent. of the cost of the system. It does not seem very constructive to spend large sums of public money on administrators to tell people that they cannot have what they want. It is a little like the proverbial plumber's bill—"To making good leaks in pipes: 7/6d".

What happens if people come up against this problem? First, they may possibly refuse the tenancy. It happens in a number of cases. That leads to the problem with which we are all familiar of the silting up of accommodation which provides temporary housing.

Let us take the example of the case of a 22 year-old man estranged from his parents since he was 16 and who lived in a hostel for five years. He was found not to meet Direction 4 and did not apply for a loan because he was on the younger rate of income support and could not afford the repayment. He could not accept the flat that he was offered because he said that he could not afford to move in. That not only incurs the hostel costs, which are not inconsiderable, but also increases the demand for more hostel places because those waiting behind in the queue cannot get in. The prospect of extra costs is obvious and considerable. Meanwhile the people who do not obtain secure accommodation are not earning, they are not paying taxes and are not reducing the public sector borrowing requirement.

If those people move into bare-board accommodation, there are a number of possible results. They may suffer from illness. Let us take a case that was discovered by the National Association of Citizens Advice Bureaux. A family with two children suffering from asthma was moved into a building with no heating. If I were in the Department of Health, I would suspect that the Department of Social Security was wantonly sweeping costs into my department. The Department of Social Security is often sinned against in that regard. However, I believe that it was sinning, and if it wishes not to be sinned against, it should desist.

In some cases there may be psychological damage. One may say that people should be tougher. But, of course, they would not have got into such a situation if they had not suffered considerable misfortune already. Perhaps I may refer to the case of a woman with three children who had been a victim both of burglary and of domestic violence. She was left sleeping on a sofa, having to borrow a refrigerator and a cooker and to make do with curtains that did not fit. If one thinks about it, any woman who has been the victim of domestic violence is in a position to understand the story of Susannah and the Elders. It is a quite unnecessary stress.

Alternatively, such people may turn to crime. The number of ex-offenders on the list of people who have difficulty with regard to accommodation is quite considerable. Many of those people know perfectly well what they have to do if they need to obtain the money they lack. But I do not believe that it is our duty to lead them into temptation. Alternatively, the children may be taken into care. The cost of that is very great indeed —far more than a grant for a little furniture. It occurs particularly when mothers are unable to cook for their children and cannot feed them properly. They may be told, as one mother was, "That doesn't matter. You can go to the takeaway"—a cost to which income support does not run.

There are considerable problems of debt. It is a very great pity that the Department of Social Security keeps no record of the indebtedness of those on benefits. Such scraps of information as we can discover suggest that, if it collected such information, it might find the result rather startling.

If we can lift those people out of homelessness, they can earn and pay taxes. If not, they are back on the streets, where Crisis tells us that TB is now beginning to spread at an alarming rate. That again is an expensive illness. Therefore if the Government will spend that little bit of money they can save themselves a fortune.

I hope that the Government will not tell me, as one of my colleagues said of the government of Charles I, that they are not rich enough to afford economies.

9.43 p.m.

Baroness Hollis of Heigham

My Lords, I, too, thank the noble Countess, Lady Mar, for initiating the debate, on behalf of her noble friend Lord Henderson, on the report entitled The Bare Necessities. It is especially appropriate that it follows the debate last week on housing and homelessness in which we explored some of the problems facing many homeless people, especially the single and the vulnerable, in obtaining a home of their own.

Last week we argued that a crucial need was for a home, but that home also has to be made habitable. We also discussed last week that many, perhaps most, of the homeless have, by being in bed-and-breakfast accommodation, lost not only their home but their furniture. Women with children may have fled a violent relationship, leaving everything behind them. Young single people coming out of care, older single men and women coming out of institutions have clearly little or nothing in the way of possessions. They are homeless, jobless, rootless and very poor.

Often against the odds, the local authority has offered them a flat. The would-be tenant then needs help in furnishing it. Yet we find that three-quarters of all requests for community care grants are refused; half of all pensioners and three-quarters of the sick and disabled are refused grants; 80 per cent. of the unemployed are refused loans.

As the Social Security Advisory Committee said, it is not just a question of total moneys, but also the lottery —as the noble Earl, Lord Russell, and the noble Countess, Lady Mar, said—by which that money is distributed. The total budget of the social fund is low; its administrative cost is very high. I think I am right in saying that in 1992–93 —the last year for which we have complete figures—£163 million was spent in dispensing some £317 million. I doubt whether there is a higher ratio of costs to money disbursed in the entire field of government expenditure. Of that £317 million discretionary money, £188 million was recovered money; only £126 million was new.

However, although the "new" money was low and the administrative costs high, what is almost as bad is the lottery. The first hurdle which someone needing help with furnishings has to overcome is whether they are on income support for more than 26 weeks. If they are on support for less than that time, whatever their need, or if their benefit comes from some other source such as invalidity benefit, even though it pays them no more, they are ruled ineligible.

We have, for example, the case of a 19 year-old girl raped by her step-father, who therefore left her mother's home and was offered a council flat, but because she had not been on income support for 26 weeks she was not eligible for the community care grant. What was she supposed to do—return to the home and risk further abuse or go onto the streets?

Another claimant was discharged after two years in hospital with multiple sclerosis. He had no furniture but was refused a community care grant because he was receiving invalidity benefit at almost precisely the same level as income support. What was he supposed to do —return to hospital?

That is the first hurdle. If claimants pass that and have been on income support for more than 26 weeks, the second hurdle claimants have to pass is whether they fall into high, medium or low priority categories. I have been looking at the local guidance issued in about a dozen local DSS offices. I have it here. Almost always, the high priority includes the elderly, the mentally and physically sick, families at risk of violence or those who need help to prevent a return to institutional care. No one would challenge that high priority. However, what about other vulnerable single people, former offenders, drug or alcohol abusers? For example, if they live in East Nottinghamshire or North Yorkshire, they are counted as medium priority. But if they are in Essex they are a low priority. Alternatively, take a family under exceptional stress where there is no risk of violence. They are regarded in Norwich and Tameside as being of medium priority but in North Yorkshire and East Nottinghamshire as being of low priority —the same families.

Therefore, we find examples such as a single, homeless man allocated a council flat but refused a grant and a loan for furniture because he could have lived in a hostel and refused money for a cooker because he could eat sandwiches; or a family with six children and two beds refused a grant for beds because, though under exceptional stress, they were not at risk of violence and therefore they remained of low priority. Is that tolerable? If a family was in similar financial circumstances we would not tax that family more heavily in Norwich than in Nottingham. Why should we tolerate similar heavy discrepancies when it comes to the shadow fiscal system, namely social security?

Let us assume that our family, or our homeless, vulnerable ex-offender, have passed the 26-weeks hurdle (the first hurdle), and the second hurdle, namely that they are a high priority. They then have to pass the third hurdle, if they can, which is that of the budget. The budget is cash controlled. According to how many people present themselves and in what month of the year, all or only some of those who come within the category of high priority will be helped. Some, or none, of those who come within the category of medium priority will be helped.

For example, one week a CAB in the North East was told that only cookers could be regarded as being of high eligibility; it was told the next week that it could add to that list cookers and bedding; it was told the week after to keep phoning and it would be told what other items would be added. Too often, because of the budget, less is given than is needed. An incontinent woman who was 80 years old needed a washing-machine. She was given £75. She bought a second-hand machine, which speedily broke down within six months. The Family Services Unit interviewed people after a one-year interval and found that half of all the cookers and washing-machines which had been bought second-hand had broken down.

As I said, we would not tolerate this degree of arbitrariness in our tax system. We would not say that someone is taxed if he starts work before February but is not taxed if he starts work after February. Yet we tolerate that degree of irrationality and arbitrariness in our social security system.

The Family Welfare Association has sent me details of the 4,000 small grants that it gives out each year for items such as cookers, bedding, washing-machines and children's clothes. I quote: We find that people of apparently similar circumstances can be turned down, or accepted by the fund at any time—there is no obvious reason behind a refusal or acceptance other than that the Social Fund has run out of its monthly allocation of funds". That is the third hurdle: the budget.

The fourth hurdle, of course, is the judgment of the Social Fund officer himself or herself as to whether to offer a grant, a loan or nothing at all. The right reverend Prelate has already referred to this matter. The York research showed an identical case presented to 15 DSS local officers: for example, a lone parent needing a washing-machine. Two of those officers would have offered grants; 11 would have offered loans; two would have refused. Another example is that of a pensioner with special clothing needs. Six of those officers would have offered grants; four would have offered loans; five would have offered refusals.

We were told this morning at the presentation of the report The Bare Necessities that in the same DSS office, of two people with identical circumstances, income and needs, one was offered £621, the other £375; and they were told that that was how it was. It is quite arbitrary. We would not in our tax affairs tolerate decisions on whether you did or did not pay capital gains tax, for example, on the personal preferences, idiosyncrasies or responses of the taxman. Why should we tolerate it in the DSS?

The final hurdle is, if you are refused, the question of whether the matter goes to review. That usually depends on the availability of a local advice or aid centre. Over one-third of those whose claims are refused have their claims granted if they go to appeal. For example, in East Anglia, a client of the CAB with three children, who had been rehoused by the local authority, asked for a community care grant for furniture and was refused as being of only medium priority. On review, the client was awarded £1,500 by the inspector.

In other words, what we have is welfare by where you live; by what month you apply; by whom you happen to have as a Social Fund officer; and by how willing you are to go to appeal". What you do not have is welfare by need, or welfare by targeting need, as the Government insist that we have. After all, the York report showed that those who got help were neither more nor less needy than those who were refused it. It showed also that those who got grants tended to be less needy than those who got loans, who were in turn less needy than those who were denied any help whatsoever. Would we tolerate a tax system in which the better-off paid 40p in the pound and the poorest paid 70p in the pound? No, my Lords—except when it is called social security. It is a lottery, as all the research from the CAB and from the charities has shown and as this report The Bare Necessities has shown.

The Government refused to act because they said that the evidence was anecdotal, that they would await a report from their own advisory committee, the Social Security Advisory Committee. When the Social Security Advisory Committee damned the Social Fund as a lottery, the Government said that they would have to await their own independent research. When they got that from York, and when that research also damned it as a lottery, what then did the Government say? Quite remarkably, in its annual report for 1992–93 it said: Ministers have seen no evidence to alter their belief that the basic principles of the discretionary system are right and working effectively. Could I ask the Minister, in the light of the CAB information, in the light of the Social Security Advisory Committee, in the light of the SPRU report from York, in the light of The Bare Necessities, what then would count as evidence to make the Government change their mind?

As one Salvation Army officer said this morning, she never thought that when she went into the field of the Social Fund she would be taking part in gambling, but she said that that was precisely, what she was doing. And the lottery continues.

What happens to those who are not helped? Some of these have been mentioned by the noble Earl, Lord Russell. Needs do not disappear. Six months later, 40 per cent. of them are still struggling to move beyond the lilo/sleeping bag/camping stove syndrome, which is all that such people can afford when they are refused a community care grant. Some turn to social services, transferring DSS costs on to local authorities; others turn to charities, who find themselves funding what we believe to be the DSS role. As the Family Welfare Association says: We are overwhelmed by the number of applicants from all sources. Charities are having to close their lists.

Other claimants disappear into debt. The National Audit Office has estimated that two-thirds of all people applying to, and refused by, the Social Fund, are in multiple debt—rent debt, fuel debt, poll and council tax debt, finance company debt. The CAB found that in 1992 10 per cent. of all those on income support were paying off a loan to the Social Fund because they had been refused a grant, and that this was pressing down their level of income to below that of poverty. From then on they were forced to beg, borrow or steal; to move into the black economy or into the economy of semi-criminality.

Still others go without, mainly women, 60 per cent. of whom cut back on food, nearly half on essential clothes, such as a winter coat, and a quarter default on other bills, as they try, just as their Victorian great grandmothers did, to scrape and save.

An increasingly significant group, because they are refused financial help, are forced to refuse a cherished place of their own offered by the local authority. The noble Earl, Lord Russell, quoted one such instance; I would like to quote another. A young family, Mr. and Mrs. Leavis—that is not their real name—were accepted as unintentionally homeless and in priority need by the local authority. They received a permanent offer of accommodation in May 1994, just a month ago. They applied for £900 to start up their home. A swift decision from the DSS turned them down because their pressures were not exceptional. They are now, therefore, not able to leave their temporary accommodation until or if this matter is resolved by Social Fund inspectors. But, unless they accept and move into their permanent offer of housing, they may be deemed by the local authority to have turned this offer down and to have made themselves 'intentionally homeless', and therefore they may never again be eligible for a council authority tenancy.

Do Government departments not even talk to each other? Does the DSS not know what will happen to such families given the DoE guidance? Why do we persist in refusing to see the problems of people across departments?

Let me give another example from the West Midlands. A woman with two young children following a violent marriage was living in temporary housing. She was lodging with a man who had behavioural problems which frightened the children. She was anxious to accept the offer of permanent housing. But she too was told that she was not suffering exceptional enough stress. She was not eligible for a community grant and was unable to move into her new home. So she lives with a man whose behaviour is problematic, and with her children frightened and reverting to bedwetting.

We must ask the Government to consider following the advice of their own Social Security Advisory Committee; to take heed of the information offered by the case studies in The Bare Necessities; to follow the recommendations of their own research; and to consider start-up grants as of right. A few hundred pounds of start-up grant would perhaps stop the work of the DoE in responding to homelessness and of the DoH in responding to community care from being vitiated.

If government will not do that, homeless families will remain without a home; community care will remain a fiction; temporary accommodation will be blocked; hostels will silt up; children will remain in bed-and-breakfast accommodation; ex-offenders will re-offend; and families in stress will become families in exceptional stress and therefore increasingly prone to violence—all because the DSS refuses to give as of right to the poorest and most vulnerable families the means to furnish a home.

10 p.m.

Viscount Goschen

My Lords, firstly, I should like to thank all noble Lords who have taken part in this debate and especially the noble Countess, Lady Mar, who has given us the opportunity to discuss this most important subject. She began by saying that she was not suggesting a return to the system of single payments. But I believe that she was in part suggesting a form of mandatory start-up payment.

The Government do not believe that a regulated payment is appropriate for this kind of need. As the noble Countess remarked, some regulated payments are made through the Social Fund—for example, funeral, maternity and cold weather payments. However, those payments relate to events which we believe are so widespread and universal in their impact that minimal consideration of individual need is required. Regulations therefore detail the very specific situation in which such payments can be made.

But if we were to introduce regulated payments for household items limited to certain groups of people, in effect we should return to some of the problems of the old single payment scheme. It may be helpful to look at why the single payment scheme was abolished and why the Social Fund was introduced. Expenditure on single payments had spiralled totally out of control, approximately doubling every two years between 1980 and 1986 from some £48 million to £335 million. It was rigid and complex.

Earl Russell

My Lords, is that the fault of the single payment system or of government economic policy?

Viscount Goschen

It illustrates the point that, having a rigid system resulted in a rising budget. The money was reaching an extraordinary level and heading even higher. That was happening as a result of the totally rigid system. That is why we introduced the superior Social Fund system, which I shall now detail.

The Countess of Mar

My Lords, I am sorry to interrupt the noble Viscount. However, the system that I suggested is not rigid. It has flexibility in that people with small households would not need so much money. People who already have some possessions would not need so much money. But the people who need things most would be given the money.

Viscount Goschen

I take the noble Countess's point about her suggestion having some flexibility built into it, which she detailed. But it is still a form of mandatory payment. We are trying to get away from that and move towards the provisions of the Social Fund which are much more flexible. They are discretionary and much more efficient.

Baroness Hollis of Heigham

My Lords, I am sorry to interrupt the noble Viscount. Am I right in believing that when he uses the word "rigid", those of us on this side of the Chamber would use the word "rights"?

Viscount Goschen

I am afraid that I do not accept that point. Let me say by way of a question that I do not understand what the noble Baroness is driving at. A rigid system is a rigid system and that is what I have detailed. I shall now explain why the Social Fund is superior, more efficient and helps many more people.

No responsible government could have allowed such a scheme to continue and the Government believe that it would be a mistake to return to anything similar. The discretionary Social Fund takes a different and we believe better approach by allowing a wider range of needs to be considered. Social Fund officers, who know their customer best, decide priorities taking into account the individual circumstances of the applicant. They are in the right position; they possess the knowledge and will therefore be able to decide the priorities accurately.

The Government believe that the Social Fund is fairer than the old single payments scheme, which was rightly criticised because supplementary benefit claimants could get very substantial amounts to meet expenses such as essential household items, while others on low incomes had to manage without that help. Most people, at some time in their lives, have to meet the costs of setting up home, or of other relatively large and intermittent expenses. Anyone living on a limited income cannot realistically expect to get everything they need immediately, but like most other people may have to settle for accumulating items over a period of time, or making use of credit arrangements to spread the cost; including help from Social Fund loans.

One of the main aims of the social security reforms was to encourage people on income support to budget appropriately. Payments from the Social Fund are intended to complement, not duplicate, the income support arrangements. The role of the Social Fund must be seen in relation to the overall provision of social security benefits.

Having said that, we recognise that some of the more vulnerable people in our society encounter difficulties coping with certain expenses and sometimes find themselves in special circumstances where additional help is appropriate. Most community care grants are paid for the sort of items we are discussing. Over 76 per cent. of grants for 1993–94 were awarded for household items. Many of those will have gone to homeless people. The Social Fund was designed to ensure that the most vulnerable in our society will generally be given high priority. Social Fund officers are given consider-able guidance and training on how the fund can best be used to help those who need it most. This is provided by guidance not only from the Secretary of State, but also locally from the area Social Fund officers. The area Social Fund officers are well placed to recognise local factors in their district, and to target resources effectively. The Social Fund contributes to the wider policy of care in the community, but is targeted at those people in receipt of income support.

When the Social Fund was introduced the idea of interest-free loans was a new concept. They are now recognised as providing proper and valuable help to people who need household items. All loans are interest-free and repayment rates are flexible and take account of income and commitments. Only 1 per cent. of crisis loan applications and less than 2.5 per cent. of budgeting loan applications are refused because the person cannot repay the loan.

I believe that that addresses the points raised by the noble Earl, Lord Russell, earlier in the debate.

Earl Russell

My Lords, my question was how the Government justify doing that, even if they do it to only a few people.

Viscount Goschen

My Lords, the important point is that, where budgetary loans are not considered appropriate, there are other methods that can be employed; for instance, the community care grants and the crisis provisions. That is the key point. We are talking not only about loans but also about community care grants.

Baroness Hollis of Heigham

My Lords, perhaps the Minister will allow me to intervene again. I am not sure that I understand. Is he saying that people who are refused a loan because they are too poor to repay it will then receive a grant? All the evidence from the York research shows that grants go to the better-off, the owner-occupiers, the more spacious accommodation, the higher incomes; loans go to those in rented accommodation and on lower incomes; refusal of grants and loans applies to the poorest of all. If the Minister is now saying that people too poor to be able to repay a loan will in future, or have been in the past, offered grants in lieu, that will be welcome and rather surprising news.

Viscount Goschen

My Lords, the point I was seeking to make was that the budgetary loams are not the whole picture and that the grants are another part of the Social Fund. Both of these types of arrangement must be seen within the broader picture of the income support provisions which they complement.

It is important to remember that just because a loan is outstanding does not mean that it is necessarily causing problems. It simply means that the Social Fund is helping people in a practical way to manage their financial commitments.

I turn now to the criticism of inconsistency in Social Fund decisions which the right reverend Prelate, among other noble Lords, raised this evening. The Government know that there will inevitably be some variation between decisions in a flexible, discretionary system. But we should remember the considerable problems of the previous rigid system. Decisions were never really consistent under the old single payment scheme; for example, there were marked and unfair contrasts in expenditure between different areas of the country. The Benefits Agency's reorganisation of nearly 500 local offices into 159 districts, together with revised guidance and training, has improved considerably the consistency of Social Fund decisions.

The right reverend Prelate the Bishop of Ripon raised the issue of people attempting to repay their loans on reduced income support. We believe that these Social Fund loans are fair. Many people looked to previous schemes as a source of regular top-ups to their weekly benefit. That was unfair to those on or just above benefit level who managed their income without extra help. We estimate that a considerable majority of people who received income support managed to cope with intermittent expenses without the help of a Social Fund loan. By setting aside money from their weekly income to meet these expenses, they are really in no different position from those who use Social Fund loans to help with their budgeting.

As far as the budget for the discretionary Social Fund is concerned, the Government believe that it is sufficient to meet the highest priority needs whenever they occur. The noble Baroness, Lady Hollis, criticised the principle of having a top budget. But cash limits are an important and vital part of sound financial management in contrast to the expenditure on the previous single payment system which rose uncontrollably. I should add that the great majority of unsuccessful applications are not refused on budgetary grounds but because the basic eligibility criteria are not satisfied.

Directing help where it is most needed implies some judgment about the purpose of the provision as well as the financial position of the recipient. Experience with the Social Fund shows that such an approach is not only practicable but can deliver, inevitably, limited public help more effectively.

The CHAR report, which has been raised by a number of noble Lords who have spoken this evening, is an interesting contribution to the discussion about the Social Fund. However, we do not believe that it really introduces any new points that have not already been considered fully. It has suggested a scheme of grants which is really broadly similar to single payments; a scheme which had proved to be unworkable, as I have demonstrated. In this day and age of a rapidly changing society, the Government need to be able to respond as flexibly as possible to help individuals as well as responsibly controlling public resources.

The right reverend Prelate the Bishop of Ripon raised the issue of rent deposits and guarantees. I can advise him that as part of the Government's rough sleepers' initiative, in Central London the Department of the Environment has funded a pilot project for a rent deposit fund. The project is currently being evaluated by independent research which will be published later this year. Deposits are excluded from the Social Fund because of evidence of abuse under the old scheme and rapidly expanding expenditure. However, 19,000 rent-in-advance payments, worth some £3 million, were made in 1992–93 and over 21,600 payments, worth nearly £3 million, were made in the year April 1993 to March 1994.

A number of noble Lords have cited the quotation that the Social Fund is a "lottery". I strongly reject that. The Social Fund is not a lottery. The framework of the law, the directions, guidance and budgetary discipline, together with the careful consideration that is given to individual circumstances by Social Fund officers, ensure that available resources go to those with the highest priority needs.

Another recurring theme raised by a number of noble Lords was the issue of administration costs. The important point is that the recycling of loans and the budgetary framework ensure a very effective use of resources. Inevitably, detailed personal assessments of applications and recovery procedures mean that administration costs will be more than for other mainstream benefits, but the important point is that the new Social Fund computer system will result in significant improvements to efficiency.

Finally, the Government believe that the Social Fund is working well in focusing resources on those people most likely to be in need and in supporting the Government's wider initiatives to promote care in the community.

Earl Russell

My Lords, can the noble Viscount tell me of anyone who shares the Government's view that the Social Fund is working well?

Viscount Goschen

My Lords, we believe firmly that the Social Fund is working well. The point is that we are recycling money. Although the budget is a large one, it is necessarily limited. Indeed, the noble Earl himself referred to the necessity of containing public expenditure. So, within a necessarily limited budget, we have found a scheme that is helping a great many people. It is flexible and makes very efficient use of resources. We believe that any return to a system that went the other way—that is, towards regulated payments—would not be so efficient and would not help nearly as many people.

Since the start of the scheme nearly 1 million non-repayable grants have been awarded, and over 7.4 million interest-free loans. Our commitment to this important area of provision is clear. We have given more money to the fund every year since it began, and that is being repeated in 1994–95, even though there is fierce competition for public funds. In fact, the Social Fund gross budget now stands more than £50 million higher than it did two years ago.

I was agreeably surprised to note that the noble Earl, Lord Russell, was concerned about the size of the social security budget, unlike the noble Baroness who criticised the principle of having a limited budget. The important point is that the Social Fund is part of the wider social security budget. We are spending record amounts on helping those in need. Over £80 billion will be spent on social security this year. That is a cost to every working person of nearly £15 every working day. The Government are not complacent—indeed, quite the contrary. We shall continue to keep the operation of the fund under close scrutiny and we shall continue to introduce improvements, as we have done recently, to ensure that the considerable help that is provided by the fund goes to our most vulnerable citizens.

Lady Kinloss

My Lords, before the noble Viscount sits down, will he answer the question that I asked him about the Ministry of Defence and his own department?

Viscount Goschen

My Lords, my apologies to the noble Lady. With reference to her proposed scheme, we welcome any such suggestion that might be of value and I shall, of course, take note of her suggestion. I should add that there are a number of existing furniture schemes within the voluntary sector. However, I shall refer the noble Lady's remarks to my right honourable friend.