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Local Government Finance Settlement — Motion to Take Note

Part of the debate – in the House of Lords at 3:52 pm on 9th January 2014.

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Photo of The Bishop of Ripon and Leeds The Bishop of Ripon and Leeds Bishop 3:52 pm, 9th January 2014

My Lords, I, too, am very grateful to the noble Lord, Lord Smith of Leigh, for achieving this debate and to Wigan for releasing him to make that powerful case on behalf of so many of our metropolitan districts, such as Leeds, of which we have heard much in this debate. They face particular difficulties, partly because of their size and the amount that they have to provide, in responding to the cuts being made to their budgets.

I am also very grateful to the noble Lord, Lord Beecham, for his support and encouragement of the people of Benwell over 50 years. I hear much of them and of him from my daughter Catherine, who is rector of Benwell. She also shares her concern for the spiritual and social needs of that area of Newcastle. Like the noble Baroness, Lady Donaghy, I sometimes wonder when we discuss local government affairs here why we do not simply move ourselves to Newcastle on the basis that we hear so much of the north-east. On the basis that if you cannot beat them you might as well join them, I look forward to my own retirement to the neighbouring borough of North Tyneside in the next few weeks.

Today, I want to concentrate on the crucial issue of the removal of funding for local welfare provision from April 2015, which is indicated in the local government finance settlement and to which the noble Lord, Lord Smith, made brief reference as he introduced the debate. Under the Welfare Reform Act 2012, key elements of the discretionary Social Fund—crisis loans and community care grants—were abolished and replaced by funding to local authorities, with the intention that they establish their own local welfare assistance schemes. The £178 million allocated for 2013-14 was a cut of 46%, but local welfare assistance has in the past year been of crucial benefit to those who have fallen into financial crisis through the additional pressures of this period of austerity.

It is true that the money has not been ring-fenced but, in my experience, it has mostly been used to benefit those in most need. In discussion of the Welfare Reform Bill, it was a deliberate act on the part of the Government to provide that £178 million to help those in most need and to help local authorities to make provision for them. It was in response to a number of debates, including those on the capping of benefits, which took place at that time. The integrity of the noble Lord, Lord Freud, and the Government was great in that provision for those in most need in our society.

The Children’s Society’s Nowhere to Turn report has highlighted the postcode lottery in the present, new regime and in particular its effect on low-income working families who, in a crisis, are often barred from making a claim under the new arrangements because they are working. Local authorities are, however, making a real effort to provide support in kind for those in most need. I pay tribute to those, including those in Leeds, who have worked so hard to help people by making the best use of that reduced funding through local welfare assistance.

One particular danger of the reduced provision, which will be exacerbated by its abolition, is the need for people to rely on high-interest lenders or loan sharks. If all funding is withdrawn by the Government and the DWP no longer has any responsibility in this area, there will be substantial extra pressure on that group of people who fall into crisis circumstances, who are the prey of loan sharks. Loans are already a casualty of the present system. Reasonable interest rates on loans are simply not available for those in most need in most areas. Much as I applaud the work of credit unions and the substantial cross-party support for them, they are in no position to help in these crisis cases. The alternative is the payday lenders, leading to an ever increasing spiral of debt. The removal of all funding can only make that worse. Can the Minister tell us what guidance she will give to local authorities for the continued provision of safety-net schemes when the DWP has ceased providing funding for them? Can she also tell us how she envisages that people in crisis can avoid the appalling interest rates of the high-interest lenders and, worse still, the loan sharks?

Local welfare provision is often inadequate, but it is vital. We must not push people into the arms of high-interest lenders. We must defend our ability to respond to the crises which people face in their lives and for which we need to make provision.