Second Reading

Part of Welfare Reform and Work Bill – in the House of Lords at 7:26 pm on 17th November 2015.

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Photo of Lord Smith of Leigh Lord Smith of Leigh Labour 7:26 pm, 17th November 2015

My Lords, this has been a wide-ranging debate on a wide-ranging Bill, but I intend to concentrate on two aspects which I think I know something about from my experience, so I declare my interests as being leader of Wigan Council and a vice-president of the LGA. The two areas that I want to concentrate on are troubled families and social rents.

The House may be surprised to hear that I am a great supporter of the Government’s troubled families programme. If anything, it is too timid, but the principles are the right way forward. Led by the rather formidable Louise Casey, the programme has assisted 120,000 or so families and helped to turn them around. It has worked as a cross-departmental scheme and it has worked well with local government. The investment of just over £400 million has, according to the Prime Minister, produced savings of £1.2 billion—and who am I to question the Prime Minister’s comments? There have been significant savings through the programme, as we know in my own authority. There are a lot of sceptics around who say that local authorities are in the troubled families programme because there is payment by results or because they have fiddled the figures. When we were asked to turn around exactly 755 families, they asked how we could achieve exactly that number. The answer is that we worked with more than 1,000 families to make sure that we had the 755. We did not charge for the others but made sure that we could charge for them.

The programme has worked because there is an emphasis on prevention and getting in there early, working with families to make sure that we can do it. It is a slow process because you need to get families’ confidence. Frankly, some of these people are used to having men in suits come around—people like me, as they told me—to give them advice, but not necessarily the advice that they need or want. I was pleased to see that a phase 2 is going on but perhaps not so pleased that the money is not there. I hope that in the Autumn Statement, a real amount will be invested in this programme because it is about investing in people.

I was surprised to agree with a comment that the noble Lord, Lord Lansley, made about school readiness in his interesting maiden speech. School readiness really is a factor that determines life chances. In my authority about a third of kids come to school when they are not ready, but in deprived areas it can be more than 70%. We need to turn that around. I am hopeful that in the Autumn Statement, the Government will start to reverse some of their changes to Sure Start schemes and early years work because that is where we need to put a lot of attention.

In a parallel universe, today in the Moses Room we have been discussing an education Bill. I am disappointed that that Bill does not recognise—as far as I can see, as I was not able to take part—the really important role that schools play as community assets. We need to use schools to work in our communities. Where we have done that, we have even helped people to get jobs simply because they trust what goes on in schools, they trust head teachers, and so on.

In Clause 3, we are expected to agree a typical Westminster or Whitehall reporting obligation on troubled families. That is pretty weak. I hope that the Minister can assure us it is not just making sure that my officers, who are engaged in this work, have to spend more time reporting in. We want it to be a way that innovation and good practice can be spread around so that we can get this working properly across the country.

Clause 21, as a number of noble Lords have mentioned, implements the Government’s policy on social rents—a reduction of 1%. Again, as my noble friend on the Front Bench said: how can you be seen to be opposing this, opposing a reduction in the rents roll? The answer is that, for councils, it is a reversal of regular practice, it is reneging on a policy the Government agreed to only three-and-a-half years earlier.

Three-and-a-half years earlier, the Government said to local councils, “We need to review housing finance, and we need to localise it”. So we went through it, and a big exercise was done by the Department for Communities and Local Government. It came up with a booklet of which I have only the front page, The Housing Revenue Account Self-financing Determinations. As an integral part of this, some councils had to borrow money. They said that in 30 years’ time the accounts looked as though they needed to borrow money. Some actually got paid money back. The total amount borrowed was £13 billion; £6 billion was paid back. So there is a net benefit to the Treasury there of £7 billion.

My local authority was encouraged to borrow a significant amount: £98 million? Why would we do that? The Government said, “Don’t worry. Under the scheme, you will be allowed for 10 years to have a 1% increase in rents to pay for the additional servicing of the debt borrowed”. Within three-and-a-half years, that deal has been reneged on, as I said, by the Government, so in fact we have a financial deficit in my authority of probably about £35 million. What do we do? How do we cover that? We cannot raise the rents. We cannot subsidise—not that we have any money anyway. The only way to recover that debt is to reduce activity, reduce the repairs, reduce the maintenance on the property or—probably more likely, of course—reduce house building, stop doing that.

So here is a policy that the Prime Minister was announcing at the conference, a crusade to get more houses built, and in one swoop they have cut off the building of council properties. It does not take long, does it, to change minds? Of course, the beneficiaries of this rent, as my noble friend said, are not the tenants; about 70% of tenants are on housing benefits. Actually, the social housing authorities, the LGA reckons, are paying about £2.6 billion a year into the Treasury coffers.

A local authority obviously meets at the front door, as it were, the consequences of some of the welfare changes. Unlike some authorities, I can assure the noble Lord, Lord Low of Dalston, that we have maintained our welfare advice sector. The Minister has been to Wigan and seen this for himself, but it would be instructive for other Members—we are always talking about theories in here—to come to see what we call the crisis desk in Wigan.

Over the past 11 months, to give the most recent figures, we have had more than 4,500 people coming to that crisis desk in Wigan. Seventy percent of them said that they had no money. It is a complicated thing. Most of them were referred to food banks. Most of them were given support. Often, of course, DWP issues have caused them to have no money—benefits not being agreed or refused, sanctions or slowness in dealing with cases. Really, we need to change that.

We have devised a programme—unfunded, but we do it—which we call Living Well. We are trying to understand what we can do to help people. The complexity of issues that people have prevent them from getting work. Really, the DWP does not always help. We have one young man who is homeless. I would have thought that the best thing for that young man would be to try to find him a roof over his head, but the DWP keeps telling me that he has to get 10 job interviews a week. He said that, really, he just wants to get a home.

There is a toxic mix of people who have mental health problems, probably suffering from domestic abuse and other issues. We need to resolve that. If we are going to solve poverty in this country, the DWP needs to become part of the solution, not one of the main causes.