I welcome the opportunity to speak on behalf of the Welfare Reform Committee following our stage 1 report on the Welfare Funds (Scotland) Bill. I thank the committee clerks and colleagues who served on the committee throughout the bill’s consideration for the hard work that they put in. I also thank those who gave evidence to the committee for informing us of the issues and the concerns of civic Scotland and others about the delivery of the new Scottish welfare fund.
We are here to debate a bill that will place the interim Scottish welfare fund on a statutory basis. We know from the evidence that we took that the interim fund has been a benefit to many vulnerable people across Scotland. I repeat the minister’s reference to the comparison of the scheme with the DWP fund by Scott Robertson from Quarriers, who observed:
“The comparison between the new system and the previous system is like night and day.”—[Official Report, Welfare Reform Committee, 7 October 2014; c 5.]
Local authorities have also reported the benefits. Creating a statutory duty will provide greater assurance and the ability to retain staff members, expertise and knowledge. It will also help to secure local authority funding and resources and encourage better engagement with local partners.
Section 2 of the bill sets out the circumstances in which a local authority can provide assistance. In particular, we heard evidence about the need of families facing extreme financial pressure—not as a result of sudden crisis, but as an on-going part of their everyday life. When the scheme operated as the DWP social fund it had a category for families under “exceptional pressure”. The guidance clearly intends the fund to support that group of people. However, that category is not present in the bill. We have argued that the Scottish Government should reconsider the eligibility criteria in light of the evidence received to ensure that all those in legitimate need of the fund are able to access it.
Section 3 allows for outsourcing or joint administration of the fund between local authorities. We took evidence that there are benefits that may be drawn from joint working, particularly for smaller authorities, such as economies of scale, increased purchasing power, sharing best practice and increased consistency. However, third sector organisations are firmly against the use of private third-party providers being involved in the delivery of state benefits for profit. As a committee, we have heard the horror stories of Atos Healthcare’s administration of the work capability assessments. We are clear that we do not want a repeat of that situation.
The committee took some comfort that the Scottish Government does not envisage the fund being outsourced to a private company. However, we noted that contracting out the services would likely be subject to European Union regulations on public procurement, which requires public bodies to comply with rules on equal treatment and non-discrimination.
In light of that, some members thought that the potential for outsourcing should be removed from the bill and that the provision should be restricted to joint working with other local authorities. However, a majority of the committee was content to recommend
“that the Scottish Government consider the issue of outsourcing in light of EU procurement laws and thresholds to ensure that private companies are not allowed to undertake the work.”
That was probably the most contentious area of the bill. I am personally delighted by what the minister, having heard the evidence, said today. I am not sure whether Alex Johnstone will maintain his position on the matter, but I am delighted that the minister’s position has moved.
Section 4 concerns the review of decisions and provides for the Scottish Public Services Ombudsman to take on a new role as a second-tier review body. Witnesses’ views on the new role were split. Local authorities thought that it would be more consistent with the principles of local self-governance if second-tier reviews remained under local authority control, whereas the third sector was in favour of the use of the SPSO, which is regarded as independent, consistent and impartial. The committee agrees that independence, consistency and impartiality are essential principles for any review body. We therefore support the Scottish Government’s proposal that the SPSO conduct second-tier reviews, and we welcome the SPSO’s commitment to carry out a full consultation and publish guidance. We support the call for an appropriate provision to that effect to be included in the bill.
Section 5 sets out the circumstances in which payments or assistance may be repaid or recovered. We understand and support the Scottish Government’s clear intention for the fund to be a grant-making scheme, but in the interests of future proofing the fund we recommend clarification to ensure that recovery of awards is considered only in the context of dealing with fraud.
The increasing demand on the fund and the increasing impact of welfare reforms, much of which is still to be seen, were concerns for witnesses. Third sector organisations expressed concern about variation in spend across Scotland. The minister responded with an assurance that the Scottish Government will consider a needs-based approach to future budget allocations. The committee welcomes that. We also recommend that an additional category, on monitoring unmet need and the reasons why it has arisen, be included in COSLA’s benchmarking indicators.
Another strong message from the evidence was that administrative funding is falling short and that local authorities are supplementing funding from their own budgets. We heard that Dundee City Council is short by 30 or 40 per cent, just on the cost of processing applications. COSLA said that failure to address such concerns will potentially jeopardise the wider outcomes that the bill is trying to achieve.
It is vital that administration of the fund is supported and that growth in demand is recognised. We welcome the assurance that the Scottish Government will reconsider the distribution of administrative funding if strong evidence emerges from the benchmarking exercise that is due to be completed by COSLA. We encourage COSLA to make its findings publicly available as soon as possible.
The funding that will be allocated to the setting up of the SPSO in the role of second-tier reviewer provoked a mixed response. Our discussions focused on the uncertainty around the number of cases that the SPSO will need to deal with. Jim Martin, the Scottish Public Services Ombudsman, said:
“For planning purposes, we have had to arrive at numbers in order to think through what the implications would be if we reach a certain level of appeals. What the actual numbers will turn out to be is anyone’s guess at the moment.”—[Official Report, Welfare Reform Committee, 4 November 2014; c 23-4.]
The uncertainty will have a significant yet currently unquantifiable impact on the SPSO’s funding, resource and space requirements. We welcome the SPSO’s intention to be flexible so that it can adapt to changing demands. When the legislation is in place, reviews should be conducted to establish the true nature of demand for second-tier reviews.
The bill provides only a framework; much of the detail about the running of the fund will appear in regulations and guidance. We recommend that regulations be subject to the affirmative procedure.
Witnesses put forward a wide range of evidence on the operation of the fund to date. I will highlight one or two of the points that they made.
Strong arguments were made about whether it is better for an applicant to receive an award in the form of cash or in the form of vouchers or goods. The provision of goods allows councils to know that the award is being used as intended, and it can provide for local businesses opportunities in procurement and distribution. However, being allowed a choice is essential in order to maintain a level of dignity and self-determination and to reduce stigma. Treating applicants with respect, despite their circumstances, is vital. We welcome the Scottish Government’s assurance that it will look again at the issues of stigmatisation and choice. Providing options and meeting individual needs should be central to the fund’s process.
We spoke directly to some individuals affected. Connor, a welfare fund user, said:
“I felt quite a lot of the time as though the person did not recognise me as a person. They just saw me as a voice on the phone looking for money. If they were to meet face to face with people, they could see the reality that you are a human being who has nowhere else to turn”.—[Official Report, Welfare Reform Committee, 28 October 2014; c 10.]
Fund users also had a view on processing times. In the interim Scottish welfare fund scheme, local authorities have 48 hours in which to process a crisis grant. However, in the previous DWP fund scheme, that deadline was 24 hours. We view crisis grants as an essential part of the safety net provided to vulnerable people, so it is essential that local authorities work as quickly as possible to deliver grants to applicants and keep them informed of the process. The committee notes the minister’s assurance that local authorities are working to a same-day deadline and that the 48 hours is the maximum time allowed.
Overall, we welcome the Welfare Funds (Scotland) Bill and support its general principles. The committee recommends that the bill passes stage 1.