(8 years, 7 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Stephen Timms (East Ham) (Lab)
I beg to move,
That this House notes that, while some aspects of the universal credit system are likely better to support families with children, some groups of children and families are particularly likely to lose out, and many may struggle with elements of the new approaches to payment and administration; further notes that there has been no revised impact assessment to take account of significant cuts to the work allowance; and calls on the Government to re-assess the effect of its policy on universal credit in light of those cuts and to ensure that the number of children in poverty, and particularly those in working families, falls as a result of the introduction of the new universal credit system.
I am extremely grateful to the Backbench Business Committee for giving us the opportunity to debate this subject. Once universal credit is in place, it is estimated that about half of all the children in the UK will be in households that are entitled to it at any given time, so it will have a huge impact on children and one that it is important for us to scrutinise.
I am pleased to see my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) and the Minister for Employment in their places. I have always enjoyed debating these matters with the Minister, but I often wish she felt as willing to disagree with her right hon. and hon. Friends on her ministerial brief as she is free to disagree with the Prime Minister about Europe. However, I fear I may be disappointed when we come to the end of the debate. I hope that the debate can shed some light on the impact of universal credit on child poverty around the UK.
The Opposition have always recognised that there are significant potential benefits from universal credit: simplifying the system, merging six different benefits into one and, in particular, making it much easier for people to work out the effect on their financial position if they were to move into work—that is difficult at the moment but under universal credit should be simpler. The former Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), who of course resigned from the Government after the Budget fiasco on disability benefits, is entitled to a good deal of credit for coming up with the original idea and driving it through while he was in the Government.
Unfortunately, however, the right hon. Gentleman is not entitled to very much credit for the way that he implemented universal credit—the Department got itself into a terrible mess, and the Cabinet Office had to step in to sort out a looming IT disaster. The result is that universal credit is now running extremely late. On the original timetable, set out in 2010, transition from the old benefits system to universal credit would now be almost finished, and the whole thing would be complete by next year. In fact, implementation of universal credit is really only just beginning. According to the most recent figures, from March, 225,000 people are receiving universal credit, of whom almost 88,000 are in work.
The initial plan was hopelessly unrealistic, as was pointed out by the Opposition at the time. Unfortunately the Government ignored those warnings. We were told at one stage that 1 million people would be claiming universal credit by April 2014; two years later, we still have not reached a quarter of that number. Things are a little unclear, but it now looks as though the current plan has transition complete by 2022, which is five years later than originally announced.
Christina Rees (Neath) (Lab)
Does my right hon. Friend think it right and fair that, as a result of the piecemeal roll-out of universal credit, along with the cuts to work allowances, some families could be more than £3,000 a year worse off than they would be if they were in exactly the same financial circumstances but lived in an area where tax credits were still available?
Stephen Timms
No, I do not think that that is fair. There is now a large and growing group of people who are significantly worse off than they would have been because they have the misfortune of being in an area where universal credit is paid instead of tax credits. My hon. Friend is absolutely right to draw attention to that.
When the universal credit project started in 2011, we were told that it would be completed in six years. Today, five years later, we are being told that it will be completed in another six years, by 2022. Five years into this initiative, its expected completion has been delayed by five years. We are no nearer the end now than we were told we were five years ago.
Jeremy Quin (Horsham) (Con)
The right hon. Gentleman was generous in his support of the principle of the scheme. Surely he must accept that it is better to get it right. A steady, phased implementation is the right way to ensure that the benefits to which he referred are properly implemented across the country.
Stephen Timms
Of course that is right. There should have been a sensible timetable and plan from the start. It was pointed out to Ministers that the original plan was unrealistic, but unfortunately they took no notice of that.
It is not just the timetable that has changed, however, but the substance. What is being implemented is now significantly different from what it was originally going to be. A report published last week by the Resolution Foundation has made that very clear; I will refer to that report a number of times in my speech, but at this point I will quote one observation from its executive summary, which says that
“the latest series of cuts—announced at last year’s Summer Budget—risk leaving UC as little more than a vehicle for rationalising benefit administration and cutting costs to the Exchequer.”
That is at the heart of this debate. Universal credit is now set to be a pale shadow of what Ministers initially announced. The losers, both from the cuts made to the original proposals and from flaws in the original design that have never satisfactorily been addressed, will above all be the nation’s children.
The Resolution Foundation has explained the impact of the £3 billion cut announced last summer:
“As initially designed, UC gave broad parity with the current tax credit system…Now, UC will…be less generous than the tax credit system for working families.”
That is what gives rise to the anomaly and unfairness to which my hon. Friend the Member for Neath (Christina Rees) drew our attention.
Rebecca Long Bailey (Salford and Eccles) (Lab)
Is my right hon. Friend as shocked as I was to hear that a recent report from the Children’s Society has shown that disabled children will get considerably less money under universal credit, and many will receive only around half of what they currently get under tax credits?
Stephen Timms
My hon. Friend is absolutely right. That is a shocking aspect of what has always been proposed with universal credit—the support for disabled children is being drastically reduced. I hope we will have time to discuss that.
Will the Minister publish an updated version of the impact report for universal credit that was published alongside the 2011 Welfare Reform Bill, which introduced it? I will come back to that, because what is now being introduced is certainly not what the previous Secretary of State had in mind when he launched the universal credit initiative six years ago.
Throughout the last Parliament, Ministers repeatedly said that they were committed to eliminating child poverty, and they cited the introduction of universal credit as key to helping to achieve that. The 2011 impact assessment, which I hope the Minister will update, said that universal credit would reduce child poverty by 300,000. A written answer in January 2013 gave the lower figure of 150,000, half the initial figure of 300,000. We have not had an update since the really big cuts to universal credit announced last summer. That is what I am hoping the Minister will give us.
All of us will recall the furore when the Chancellor announced swingeing tax credit cuts last summer. I pay tribute to those Government Members who, unlike the Chancellor, grasped what those cuts would mean to many hard-working families struggling to make ends meet, such as the family of an ambulance driver earning £20,000 a year, who stood to lose a full £2,000 from the cuts. Thankfully, the Chancellor was forced to abandon those plans. But the equivalent cuts to universal credit—at that time, claimed by hardly anyone in work—went ahead, so the Chancellor’s cuts to tax credits will, over time, be implemented by stealth. Working families on universal credit rather than tax credits saw a big income cut last month, as my hon. Friend the Member for Neath has already pointed out.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My right hon. Friend is making a strong point about the value of the cuts and the wider impact of the changes. Does he agree that there is a significant challenge with the move from weekly or fortnightly payments to monthly payments? With a week’s processing time for claims, and payments in arrears, that could leave five weeks before people receive claims under universal credit. We are told that there is an advance payment system but Citizens Advice has said that six in 10 clients coming to a citizens advice bureau about universal credit have not been told about it. We could see many people out of pocket and really struggling to get by, through no fault of their own. That can have a huge impact on children.
Stephen Timms
I am grateful to my hon. Friend for raising that point, and Citizens Advice points out that this is the biggest practical problem that arises where universal credit has already been introduced. The assumption with universal credit is that people have a monthly pay cheque that will see them through the first month, and that they will receive universal credit at the end of that. However, Citizens Advice suggests that more than half of those claiming are paid weekly, not monthly, and therefore do not have a month’s pay cheque to keep them going for those five weeks. That is causing serious problems.
Will the Minister update the House on what the Government now believe the effect of universal credit will be on child poverty? Given the drastic cuts that we have seen, I believe that implementing universal credit will increase child poverty, rather than decrease it as we were told it would, and as—I have no doubt—was the intention of the former Secretary of State for Work and Pensions in introducing this radical change.
Some information on that question has been provided by the Institute for Fiscal Studies in its February report, “Living Standards, Poverty and Inequality in the UK: 2015–16 to 2020–21”, which shows relative poverty rates from 1997-98 to 2020-21. It points out that in 1997-98 relative child poverty—which was inherited by the incoming Labour Government— stood at 27%. By 2010-11 when that Government were replaced, that figure was down to between 17% and 18%. The statutory target enshrined in the Child Poverty Act 2010—which I took through the House with all-party support—was 10% by 2020, but after 2010 the level of child poverty flatlined for a number of years, and it is now starting to rise. Under the IFS projection, by 2020 it will be virtually back up to the catastrophic level inherited by the Blair Government in 1997. As the IFS states in its report
“the projected increases over the next few years simply reverse the large falls seen under Labour.”
It is interesting to contrast that with what the IFS says about pensioner poverty. Like child poverty, pensioner poverty in 1997 was at a high level—around 27%—but the policies of the Labour Government reduced that to around 17%, and that level remained fairly stable throughout the previous Parliament from 2010 to 2015. The future trajectory for pensioner poverty suggests that it will not rise and will carry on at around 17%. By contrast, child poverty will rocket back up to the levels of 1997. Under the IFS projection, the rate of child poverty in families with more than three children will be more than 30% by 2020.
The huge cuts announced to universal credit will come about by reducing the income of working families with children—a lot of families will be much worse off not only compared with what they would have received under the tax credit system, but in comparison with what they would have received if the original universal credit proposals had gone ahead. The Child Poverty Action Group highlights problems for lone parents and states that
“lone parents will be hit particularly hard, and stand to lose…around £554 per year if renting, or over £2,600 per year if not…The children of single parents are already at twice the risk of living in poverty as those in couple families, and this will exacerbate their disadvantage”.
Cuts to universal credit will drastically reduce the income of working families, and just as big a worry is that incentives for unemployed parents to get into work will be much weaker under current proposals for universal credit than originally intended. That was spelt out by the Resolution Foundation in its report, which states:
“These cuts don’t just affect incomes, they also undermine the scheme’s incentives structure… Returns to entering work are much lower than anticipated under the earlier design of UC.”
It warns that parents—particularly lone parents—will find the incentives to work more hours very weak, and many will reduce their hours for a very small income drop.
Christina Rees
Does my right hon. Friend agree that guidance from the DWP that instructs people to work an extra 200 hours a year for no extra money, to make up the thousands of pounds a year that families are set to lose as a result of cuts to universal credit, is unacceptable?
Stephen Timms
Yes, the suggestion that people can make up those losses simply by working more hours is unrealistic in many circumstances. The Resolution Foundation also points out:
“For second earners in couples the situation may be worse still, with increasing numbers potentially deciding not to enter work at all.”
The whole point of universal credit was supposed to give people incentives to be in employment—indeed, yesterday the Secretary of State reiterated that point at questions to the DWP. The problem is that as currently proposed, those incentives will not be in place when universal credit is rolled out.
Let me draw the Minister’s attention to an article that was published last month and written by Deven Ghelani, who was one of the original architects of universal credit at the Centre for Social Justice. He describes the cuts to universal credit work allowances that were introduced on 11 April as
“undermining the original intent of Universal Credit—to make work pay…The Government should maintain support for work incentives within Universal Credit…these cuts to work allowances will not help to make work pay for low earners.”
That is a deep problem with what is now proposed.
The Minister will argue that calculations of child poverty—the reduction in child poverty of 300,000 that was announced by the Government in the original impact assessment for the legislation, and the subsequent written answer estimate of 150,000—do not allow for the dynamic effects of universal credit and of encouraging people into jobs. In his article, Deven Ghelani addresses exactly that point and states:
“Lower work allowances will limit the dynamic effect of Universal Credit and…will make it harder for households to make up their shortfall by working additional hours.”
That point was also raised by my hon. Friend the Member for Neath.
Stephen Doughty
I am sure that my right hon. Friend has had the experience of meeting many constituents who have to make agonising decisions when making up shortfalls in their income, particularly when it comes to children, whether for basics such as food and school clothes, or modest birthday presents. Sometimes that will force people down the route of getting into further debt, which further compounds their situation. We have seen the horrors of payday loan companies, and others, and many families will find themselves in difficult situations, particularly during that transition period, and they may end up getting further into debt.
Stephen Timms
My hon. Friend is right, and Citizens Advice made exactly that point about the change to support for disabled children that my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) referred to. A large proportion of those affected say that they will have to cut back on food, and are likely to get into debt as a result of the cuts.
Deven Ghelani refers to
“the challenges that arise from weakening work incentives within this Government’s flagship welfare reform.”
The Minister will understand why that is a problem, given what the Government have been telling us for years about what universal credit was going to do.
The IFS’s projections for dramatically rising levels of child poverty over the next few years are not only about universal credit; other factors also have an impact. As far as I can see, however, the projections are consistent not with universal credit reducing child poverty—we were originally told it would reduce child poverty—but with universal credit increasing child poverty. It is low-income families and children who will bear the brunt of the cuts, while older and better off people will not be affected at all. I press the Minister to tell us the Government’s current estimate of the effect of the implementation of universal credit on the child poverty figures.
That is the big picture impact of universal credit, but there are a number of other aspects of its design that I want to touch on. I will try to do so very briefly. The first aspect is the eligibility of universal credit claimants to free school meals. At the moment, entitlement to so-called “passported benefits” is dependent on receiving means-tested, out-of-work benefits. That simple test is no longer available in universal credit, because the benefit does not indicate whether the claimant is working or not—indeed, that is one of the advantages of universal credit. The Government therefore have to devise a new eligibility test.
There has been discussion about how, instead of free school meals, claimants could be given cash which could be tapered away with the rest of their universal credit payment. The problem, however, is that we know much of the cash would not be spent on school meals but on something else. There is a real danger of the school meal system collapsing. The Government have rightly rejected that option. We could envisage an electronic system, where claimants are given credits that could be used only to buy school meals. Those, too, could be tapered, but currently there is no IT system in place to do that. The Welfare Reform and Work Bill Committee asked about this during pre-legislative scrutiny in 2011. The Secretary of State at the time told us we would have an answer before the Bill gained Royal Assent in summer 2011. Five years later, we still have not had an answer. Ministers often tell us it is a matter for the Department for Education. The problem is this: the way this question is answered is crucial to whether universal credit will achieve its goal.
It has been hinted that free school meals eligibility will depend on a family’s income being below a particular threshold. The huge problem with that is that it would introduce an enormous new cliff edge into the benefit system, which is exactly the kind of perverse incentive that universal credit is intended to remove. In fact, it would be far worse than any of the perverse incentives currently in the system. If one’s income is just below the threshold—whatever it may be—the last thing you would want is any kind of pay rise or hours increase that would cause you to lose, overnight, the benefit of free school meals for your children. With three children, well over £1,000 a year could be lost.
What is the answer? I recognise that this is a genuinely difficult issue. I do not criticise Ministers for the fact that it is difficult, but I do criticise Ministers for the fact that five years later we still do not have an answer. Increasingly, it seems to me that the viable solution, albeit quite a costly one, will be to extend the current temporary solution that free school meals should be made available to everyone who claims universal credit whether they are in work or not. I ask the Minister when it is likely that we will get a decision on this issue.
My hon. Friend the Member for Salford and Eccles drew attention to the severity of the proposed cuts to the incomes of disabled children through universal credit. The tax credit support of about £60 a week will be cut to £29 a week. I think all of us can see that for an estimated 100,000 families with disabled children that will be a dramatic reduction in their income. My hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) drew attention to the problems with the long delay between someone making a claim for universal credit and receiving the money. The assumption that people will have a month’s pay cheque in the bank to keep them going in the meantime is proving to be unfounded. The Trussell Trust published its annual statistics last month, which show another increase in food bank demand in the past year. It notes:
“In some areas food banks report increased referrals due to delays and arrears in Universal Credit payments.”
Will the Minister look again at the administrative arrangements for universal credit, as it seems the current arrangements will be a serious problem for many families with children?
The final point I want to raise is that at the moment local authorities pay housing benefit. They can see which claimants will be hit by cuts to benefits of various kinds and provide additional help and tailored support. That is what we have seen in practice. Under universal credit, however, the payment will be made by the DWP. Local authorities will no longer have the data about people’s circumstances. Will the Department provide that data, which it will have instead of local authorities, to local authorities so they will be in a position to continue to provide the kind of tailored support we have seen in the past couple of years?
My fear is that the implementation of universal credit may well have a deeply damaging impact on Britain’s children. In particular, I would like the Minister to give us an update on the Department’s estimates, published in 2011 and updated in 2013, for the impact of universal credit on the number of children living in poverty.
Peter Heaton-Jones (North Devon) (Con)
I echo the words of the right hon. Member for East Ham (Stephen Timms). The Backbench Business Committee has, properly, allowed this debate and he has introduced it very wisely indeed.
In my mind, there is a difficulty with the motion as it currently stands on the Order Paper: it seeks to look at universal credit in isolation. That is a problem, because what we need to consider is the entire package of measures the Government have introduced with regard to changes to benefits and very significant movements forward in seeking to tackle child poverty. We need to look at all of those measures in the round and as a whole, and not focus solely on universal credit. The package of measures we need to be thinking about are the increases in the personal tax allowance, the introduction of the national living wage and better childcare provision, which goes to the heart of what this debate seeks to address.
Neil Gray (Airdrie and Shotts) (SNP)
The hon. Gentleman talks about needing to take these issues in the round. Does he accept that in February this year the IFS predicted that, taking all issues in the round including planned tax and benefit reforms, child poverty will increase from 15.1% in 2015-16 to 18.3% by the end of this Parliament?
Peter Heaton-Jones
I am glad the hon. Gentleman mentions the IFS, because it also said that
“universal credit should make the system easier to understand, ease transitions into and out of work, and largely get rid of the most extreme disincentives to work or to earn more created by the current system.”
The IFS seems to quite like the introduction of universal credit, which has to be looked at in the round. The Government are introducing a whole package of measures. I listed some of them. The growing economy and rising employment also help.
The other issue that is not taken into account when we consider universal credit is what is sometimes referred to as the dynamic impact—a horrible bit of jargon—of universal credit. This seeks to take into account changes in individual behaviours in response to the introduction of universal credit. It is quite difficult to analyse but it means improved opportunities for people to move from welfare into work, which changes people’s behaviours. This is a vital point. Even though it is in its early stages of introduction, as pointed out already, there is significant evidence that universal credit is doing well and succeeding at ensuring that more people move off welfare and into work. The latest figures show that for every 100 people who found work under the old jobseeker’s allowance system, about 113 universal credit claimants move into a job. What matters, however, is not just the fact of moving into a job but the quality of the job and the pay, and people are actively looking to increase their hours and their earnings as well.
Jeremy Quin
Does my hon. Friend, like me, welcome the emphasis on in-work progression? The story does not end when someone happily gets into a role. It matters also that they are encouraged through Jobcentre Plus to improve their hours and their standing in the firm and get paid more over time.
Peter Heaton-Jones
I absolutely agree with my hon. Friend. That is important, and the latest figures show that 86% of claimants on universal credit are actively looking to increase their hours, which compares to 38% under JSA, which is a significant difference. People are actively looking to increase their earnings as well, which goes to the heart of his point. Some 77% of those on universal credit are actively looking to increase their earnings, compared to 51% on JSA. That is a really important part of the universal credit package.
Mark Durkan (Foyle) (SDLP)
Is the hon. Gentleman really trying to tell us that the dynamic impact will compensate for the loss of income that families, particularly those with disabled children, will suffer under the universal credit changes?
Peter Heaton-Jones
The hon. Gentleman leads me on to talk about children in particular—the essence of the issue the motion seeks to address—so let us talk about what the Government are doing to reduce child poverty. The latest households below average income statistics show that child poverty in the UK remains at its lowest level since the mid-1980s—the lowest for 30 years. The number of workless households has fallen by about 750,000 since 2010 and—this is the crucial point that goes to the heart of it—there are nearly 500,000 fewer children living in workless households.
The Government, therefore, have a good and sound record on reducing child poverty and targeting the welfare system very carefully at those who need it the most. That is the key to what universal credit seeks to do. The hon. Member for Foyle (Mark Durkan) mentioned young children. The Government have invested £2.5 billion in the troubled families initiative and the same amount again in the pupil premium, which provides extra funding for the most disadvantaged children in school. And here is a measure we do not hear much about from the Labour party: income inequality is down under this Government.
Peter Heaton-Jones
That is what the statistics show. It is important to remember that the Government are having some success.
I want to touch on the Government’s announcement of the introduction of the new and significantly strengthened approach to the life chances of Britain’s most disadvantaged children. I sat last autumn through 17 sittings of the Bill Committee for the Welfare Reform and Work Act 2016, along with the Minister and other hon. Members I can see today on both sides of the House. For those who were not there, this was a very important part of what the Committee discussed. The Act seeks to ensure that the life chances of the most disadvantaged children are front and centre in all the welfare reforms we seek to introduce. That will be central to our one nation approach over the next five years. Ministers are committed—I have heard them say it several times—to this much more effective measure focused on the real causes of poverty.
I repeat, however, that we need to look at this as a whole. I am not saying that this debate is not worthwhile, but I question the wording of the motion and the fact that it merely isolates universal credit. We need to look in the round at all the measures and welfare reforms that the Government have introduced and which amount to a significant and beneficial package of reforms.
Peter Heaton-Jones
If the right hon. Gentleman will forgive me, I am coming to a conclusion.
I understand the concerns that the right hon. Gentleman has raised and which the motion seeks to address, but having sat through the Bill Committee, I think that universal credit will bring longer-term benefits. It needs to be seen as part of a package of measures. I am not for one minute saying it is not important that we look at how children are being affected by these measures, but I know that the Minister is addressing the matter and that the Government have put the effect on children at the heart of their full package of welfare reforms. We want to ensure that those effects are beneficial. I believe that they will be and that the Government are moving in the right direction.
Kate Osamor (Edmonton) (Lab/Co-op)
I thank my right hon. Friend the Member for East Ham (Stephen Timms) for his eloquent introduction to the debate and the Backbench Business Committee for bringing it to the main Chamber.
This debate is of particular concern in my constituency, where there is a high proportion of people claiming welfare benefits. As of April 2015, there were 14,500 people on tax credits, and it is estimated that, by 2020-21, 19,000 people will be on universal credit. According to figures from Child Poverty Action Group, reductions in work allowance under universal credit, introduced in April 2016, will result in a working single parent in rental accommodation losing up to £554 per year and in a working single parent who owns their home losing up to £2,000 per year. In both cases, this is more than double the loss suffered by working couples. The majority of these single parents are women. Once again, this is a cut that comes at the expense of women, who account for 86% of cuts to benefits and tax savings. This figure has increased, not decreased, as a result of the Chancellor’s latest Budget.
A single parent already working full time on the national living wage will have to work an extra 46 days each year—more than two additional working months—to make up what they have lost. While the Government may paint these reductions in income as an incentive to work, for single parents already in full-time work, extra hours are not realistic. Support for childcare might have increased from 70% to 85%, but this will not compensate families for the losses they will suffer as a result of the changes in universal credit. End Child Poverty estimates that 42% of children in my constituency live in relative poverty, which makes it the constituency with the sixth-highest level of child poverty. The four-year freeze on support for children under universal credit is expected to reduce the value of key children’s benefits by 12% by the end of the decade, when creeping inflation will also have added to the cost of living.
In 2011, the Government forecast that universal credit would lift up to 350,000 children out of poverty. In 2013, this figure was amended to 150,000 and the Government today refuse to give a figure. There remain significant gaps between the Government’s aim of making work pay through the new universal credit regime and the reality of families facing huge cuts to their income. I would like to ask the Minister two questions. First, will the Government review the impact of work allowance reductions on working families, particularly working single families? Secondly, will they agree to review annually the decision to freeze most key children’s benefits for four years?
As I have stated, the impact of changing tax credits to universal credits will affect families in my constituency. I am here representing them and trying to get their voices heard in the Chamber, so I ask that the Government take very seriously the effect the changes will have on families and women.
Ms Karen Buck (Westminster North) (Lab)
My hon. Friend is making a powerful case. Does she agree that we should be particularly concerned about the plight of the self-employed—an increasingly large group of income-insecure people? Does she share my concern that about 800,000 self-employed people are likely to lose £1,000 a year as a result of the cuts to universal credit?
Kate Osamor
I totally agree with my hon. Friend. There are many lone workers and people who have their own businesses in my constituency, and they have come to see me in my office to say that they are very concerned because they need to use benefits to top up their salaries. This is an issue that I hope the Government will take into account.
I conclude by asking the Minister to review the impact that work allowance reductions are having on working families, particularly single families. Secondly, will the Government agree to review annually the decision to freeze most key children’s benefits for four years?
Madam Deputy Speaker (Natascha Engel)
Were you here at the beginning of the debate, Mr Graham?
Richard Graham (Gloucester) (Con)
I am very grateful to you, Madam Deputy Speaker.
Today’s debate comes at an interesting time. The right hon. Member for East Ham (Stephen Timms) introduced it with his usual reasonableness on an issue of concern to everybody here. There are two or three points that I would like to highlight in a brief contribution. The first is the biggest strategic challenge for the right hon. Gentleman and his colleagues, which is where the balance of the strategy that Labour Members are trying to pursue will lead the country. I offer two thoughts. The first is that Labour Members have still not told us what reforms to welfare benefits they would make to reduce the budget deficit that we and all our constituents still face. At a time when the country is spending more on the interest of our debt than on the education of our children, it has to be wrong to ignore this part of the equation.
I think I am right in saying that Labour opposed every one of the welfare reforms pushed through by the coalition Government in the last Parliament, which amounted to some £20 billion of reductions in expenditure, and indeed have opposed everything in this Parliament as well. This comes at the same time as consistently opposing in this Parliament measures that the Government have taken to improve conditions for businesses that generate, directly and indirectly, 75% of all the tax that pays for the services, the welfare and the pensions that we all know are so important to our constituents.
Richard Graham
I have two points in response to that. First, when it comes to generating more tax, I subscribe to the philosophy of the former Chinese leader, Deng Xiaoping, who said:
“It matters not whether the cat is white or black so long as it catches mice.”
On this occasion, when we lowered the top tax rate from 50% to 45%, the additional tax revenue was £8 billion. My question to the hon. Lady and her colleagues is this, “Would you rather have an extra £8 billion of tax revenue to spend on our vital services, or enjoy the ideological thrill of raising the top tax rate and collecting less tax revenue with less to spend on services?” I know what I would go for; I am not sure about her.
Richard Graham
The hon. Lady is shaking her head, which suggests to me that my colleague on the Select Committee on Work and Pensions is still from the school of thought that prefers to raise taxes and get less tax revenue. I would have thought that the period of Reaganomics and Thatcheromics had made it very clear that we incentivise businesses to grow, to generate more revenue and to employ more people by creating a business-friendly environment rather than the opposite. It is something that the hon. Lady and her party will have to work out.
The hon. Lady’s second question was on the married person’s tax allowance. All the evidence from research done over a period of years shows that we have happier families and less dysfunctional behaviour when we have closer families, and marriage plays a key part in that. I recognise that not all Members subscribe to the importance of marriage as a contributing factor to a happy society, but we should probably leave that debate for another day.
My second main point relates to what the right hon. Member for East Ham said about universal credit, in particular the part of the motion that states that
“many may struggle with elements of the new approaches to payment and administration”.
There is a philosophical issue here, too. Originally, the current Minister for Welfare Reform, Lord Freud, acted as an adviser to the last Labour Government, and he recommended many solutions to the problem of tax credits, which he has now implemented in government with our party. I once asked him what the difference was between the work he had done for the previous Labour Government and our own Government. He said that the difference was simply that we would implement it.
The former Labour Chancellor of the Exchequer and Member for Edinburgh South West, now Lord Darling, said in this House that Labour had not implemented universal credit simply because it was “too difficult”. His party has always struggled with the fact that we are implementing something that it had decided was too difficult. Labour Members have not been able to work out whether to oppose it all in principle, which would be odd, given that they had looked at it, or whether to attack it in detail on the basis that it is too complicated to do. As universal credit continues to move forward on its journey across the country, affecting a growing number of people, I suspect that that challenge is going to be more and more difficult, and those on the Labour Front Bench are going to have to reconcile these problems.
The assumption behind what the right hon. Member for East Ham said today is that universal credit is basically all too complicated, with the twist that it now cannot be understood by those who are going on to it. I do not know how many Members have actually been to their Jobcentre Plus and spoken to people working there about the implementation of universal credit, as well as to their customers, namely our constituents who are receiving it. I suspect that those who have done so, as I have, will find that people working in Jobcentre Plus find universal credit to be a huge step forward. More than one officer working there described it to me as a quiet revolution, while those receiving it find it much easier to understand than the plethora of often contradictory benefit systems that our country built up over a long period of time.
I fundamentally disagree with the right hon. Member for East Ham—reluctantly, because I agree with him on several things—on the notion that universal credit cannot be understood by those either receiving it or responsible for administering it. He claimed that there were “long delays” to universal credit claims, and that the Trussell Trust had said once again, having said it several times before, that the increase in demand for food banks was largely down to the delays in benefits. Because I had heard that argument for quite a long time, last year I set up with my local citizens advice bureau a service agreement that obliged it to refer to me any instance of any of my constituents who are waiting longer to receive benefits due to them than the accepted norm set by the DWP. That covered any situation. In the last six months, how many people had been referred to my office for unnecessary delays to their benefits? One—one single constituent. It could be argued that there is not a complete correlation between people referred to the food bank by the CAB and those who go to the food bank. That could be true. A number of organisations in the city of Gloucester, including my own office, refer people to our food bank. None the less, the CAB is probably—I do not have the precise statistics—the biggest single organisation handling the welfare difficulties of my constituents. It is, I think, telling that over the last six months there has been only one case of unnecessary delays in the receipt of benefits.
Stephen Timms
The hon. Gentleman has got slightly the wrong end of the stick in relation to what I was saying. The problem with universal credit is that the five-week delay is built into the design of the benefit. That is not a fault; it is how it is supposed to work. The assumption is that someone who has last month’s pay cheque in the bank can cope for a month. That is the problem that the Trussell Trust is starting to identify, and Citizens Advice is saying that, in practice, it is proving to be a very serious problem for many claimants of the new benefit.
Richard Graham
I do not think that I have grasped the wrong end of the stick, but I may have grasped a different part of the stick, and I think it is important for all parts of the stick to be considered in this context. I will, however, respond directly to the point that the right hon. Gentleman has made.
I have sought permission from the Department for Work and Pensions and my local Jobcentre Plus to install a DWP adviser in the George Whitefield Centre—appropriately, as the right hon. Gentleman will know, named after the founder of Methodism—where there is both a food bank and a health service for the homeless. I hope that, should I be fortunate enough to receive approval from the Department and the Jobcentre Plus, the adviser, with access to a computer, will be able to see precisely where the problems are, and I hope that if, as the right hon. Gentleman suggests, the inbuilt delay is a real issue, that fact will be revealed. I put it to him gently, however, that there are a number of alternative scenarios, one of which is—to put it bluntly—that when people go to a food bank and are asked why they have done so, it is very easy for them to say, “I have had problems getting my benefits.” I hope that one of the advantages of the presence of a DWP adviser will be the ability to establish the extent to which that claim is correct, or possibly slightly exaggerated. The reality of life, I think, is that people get into financial difficulties—through no particular fault of their own—in a series of different ways, and I think that that is an aspect of the Trussell Trust feedback that has not been explored in enough detail so far.
Neil Gray
It is not just the Trussell Trust that is reporting circumstances in which people find themselves requiring emergency food aid from food banks. In February last year, the Poverty Alliance in Scotland reported that delays in benefits and cuts in social security support were the direct responsible contributing factor in those circumstances. Perhaps the hon. Gentleman will reflect on the fact that that is being said not just by one organisation, but by many.
Richard Graham
I sort of thank the hon. Gentleman for his intervention, but I do not think that he should rely on statements made by particular charities that tend to generalise. I encourage him to look into the position in his own constituency in detail, so that he can establish what the issues are.
At some point, the hon. Gentleman will also have to face the same strategic issue to which I referred the right hon. Member for East Ham and his party. If the position of the hon. Gentleman’s party is that all welfare expenditure is sacrosanct from now until the end of all days, he and his party will have to think about where they will find the revenue to fund that, and how they will do so without building up excessive debt on which interest has to be paid, which reduces the amount of money that is available to be spent on services.
If the hon. Gentleman studies—as our Select Committee has—the ratio between our country’s budget expenditure on welfare and that of some of the largest comparable nations in Europe, such as France and Germany, he will see that we spend more on welfare than they do. That is the challenge there for him and his party. He shakes his head, but reality will have to intervene one day, as my colleague Ruth Davidson in Scotland has pointed out several times.
Other Members wish to speak. Let me end by addressing one particular aspect of child poverty. There is a philosophical divide between different parties in the House on this issue, but an important part of the motion tabled by the right hon. Member for East Ham is the request for the Government
“to ensure that the number of children in poverty…falls as a result of the introduction of the new universal credit system.”
Evidence suggests that the highest poverty exit rate is strongly linked to the children of families who have gone into work, and have moved from part-time to full-time employment. I believe I am right in saying that 75% is the figure that enables the number of children referred to in the motion to be reduced. I think that that tells us that any welfare system which encourages people to work longer hours, obtain promotion and advance themselves in different jobs will have a hugely beneficial impact on the number of children in poverty, and I have no doubt that the steps taken by the Government to improve the chances of those receiving universal credit of moving up the ladder in the workforce will have a positive effect on the number of children in relative poverty.
I have made four points. First, there was the philosophical point about the strategy of welfare relative to tax revenue. Secondly, there was the point about the value of universal credit to our own constituents. Thirdly, there was my gentle challenge to some of the assumptions of the Trussell Trust about why people are going to food banks, and the role of DWP advisers in shedding more light on that issue. Finally, I drew attention to the relationship between getting into the workplace and moving on, and relative child poverty. On the basis of those points, I cannot support the motion.
Neil Gray (Airdrie and Shotts) (SNP)
Thank you very much for calling me, Madam Deputy Speaker. I appreciate the flexibility that you have shown this afternoon.
I congratulate the right hon. Member for East Ham (Stephen Timms) and the Backbench Business Committee on securing this debate. The right hon. Gentleman made some powerful points in his measured, brilliant and very well-researched speech.
The new Secretary of State has been keen to push the line that his Department needs to look at people, not just at statistics. I completely agree, but where is the evidence that that is happening? Where is the compassion being brought to social security policy? In the context of this debate, the Secretary of State will no doubt wish to be reminded of a quotation from Dr Seuss:
“A person’s a person, no matter how small!”
He needs to start thinking about the impact that his Department’s policies are having on children. Now, while he is relatively new to the job, we can call them inherited policies, but as he begins his tenure by marching to the defence of everything that went before him, those policies will become his own, and he will be responsible for what unfolds. He has an opportunity to make his mark on the Department and to embark on a genuine departure from what went before—as was touted when he was appointed—and that needs to start with the cuts in universal credit. As the shadow Secretary of State rightly said yesterday, if he does not make those cuts, how will he be any different from his predecessor? Perhaps the Minister could relay that, and other issues raised in the debate, to the absent Secretary of State.
The cuts that are being deferred from tax credits and lumped on to universal credit will have a very real impact on the quality of children’s lives and their long-term life chances. The cut in the work allowance—slashing the only work incentive in universal credit—will hit families and lone parents the hardest. Lone parents without housing costs will experience the largest reduction in their work allowance, from £8,800 last year to £4,764 this year—a cut of £4,000, according to the House of Commons Library. These are working families. The children of single parents are already twice as likely to risk living in poverty as those in couple families, and, according to the Child Poverty Action Group, cuts in work allowances will only exacerbate that disadvantage.
Last week the Resolution Foundation published a devastating report for the Government, which stated that under universal credit, half a million working families would be significantly worse off, even given the changes in tax allowances and the increase in the minimum wage for over-25s. According to analysis published by the Institute for Fiscal Studies in February this year, absolute child poverty is projected to increase from 15.1% in 2015-16 to 18.3% by the end of this Parliament in 2020.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
Families who care for disabled children and are prevented from working for that reason are set to be particularly badly affected by the Government’s changes. Contact a Family estimates that those families will be at least £1,600 a year worse off. Does my hon. Friend agree that this change directly discriminates against such families, and that the Government should go back to the drawing board?
Neil Gray
I completely agree with my hon. Friend, and later in my speech I will touch on what is being done in Scotland to address some of those issues.
The Institute for Fiscal Studies says that the projected increase in child poverty is driven entirely by a sharp rise in poverty among families with three or more children, which is itself the result of planned tax and benefit reforms. Those figures are UK-wide. My constituency already has a shocking child poverty rate of 21.7%. If the rise in child poverty projected by the IFS is universally applied, Airdrie and Shotts will have a quarter, rather than a fifth, of its children living in poverty by the end of this Parliament because of this Government’s tax and social security changes. Surely it is time for the Secretary of State to see these statistics and the children behind them. One child in every four in my constituency will be in poverty if he accepts the tax and benefit changes that he has inherited.
The Child Poverty Action Group agrees that to lift families out of poverty and disadvantage, the relationship between universal credit and work must be right. It is calling for: the restoration of work allowances, particularly for single parents; a second earner allowance for couples, to support second earners to get into work without facing an immediate withdrawal of universal credit; and investment in high-quality employment support that recognises people’s individual circumstances, so that universal credit can meet its aspiration to promote in-work progression through the provision of high-quality advice, rather than through the threat of sanctions. Those proposals certainly provide food for thought.
Universal credit was supposed to involve the streamlining of a complicated system to improve work incentives, tackle poverty and reduce the scope for error and fraud. Instead, we have massive delays, huge overspends on implementation, and fundamental changes and cuts to awards that will drive more children and families into poverty. This is not what was intended, but because of this Government’s obsession with austerity at any cost, it is the reality. Universal credit has been watered down and completely undermined, especially by cutting the work allowance to ribbons.
Under the latest Scotland Bill, the newly re-elected Scottish National party Government will have power over 15% of our social security spending. [Interruption.] I hear some chuntering from across the Chamber. Although 15% will be determined in Scotland, the vast majority of social security issues will still be determined here in Westminster, which is why it is so important that we on these Benches challenge this Government whenever we can. I would prefer it if my colleagues up the road had control over all social security decisions, but the SNP is determined to use the powers that it will get to transform the service that people receive. One area of change will come when we scrap the rule that results in the removal of income for families of disabled children if their child is in hospital for 84 days. We will also increase carer’s allowance to the same level as jobseeker’s allowance, giving carers an extra £600 a year. We will put dignity and respect at the heart of the new Scottish social security agency, supported by a £200 million investment. We will also scrap the bedroom tax.
One of the key elements of today’s motion is the call for a proper impact assessment to take account of the significant cuts to the work allowance. My call to the new Secretary of State is to reassess what has gone before him, to assess the impact these cuts will have on children up and down these isles, and to set his own path of supporting people into work rather than threatening them with poverty.
Angela Crawley (Lanark and Hamilton East) (SNP)
When the Government announced their plans to introduce universal credit, their rationale was to lift people out of poverty and help them into work. It was billed as a mechanism to end cycles of poverty and to help parents give their children the best start in life. In 2011, the Government forecast that universal credit would lift 350,000 children out of poverty. In 2013, this was downgraded to 150,000 children. Today, the Government cannot say exactly how many children will be helped by the process. Will they tell us how many families they are actually helping through the universal credit system?
Based on estimates from the Children’s Society and the Child Poverty Action Group, it seems that the downward trend has continued to the point at which the number of children who will be helped out of poverty will be heavily outweighed by those who have been made poorer. That is deeply concerning. As an MP, I often hear from constituents who are struggling under this Government’s programme of austerity. I want their voices to be heard today, and I want the Minister to seriously consider the unintended—I am sure—negative impact that universal credit is having on many children and families.
Among the most damaging parts of this welfare reform are the eligibility criteria. From April 2017, only two children per family will be eligible for the child elements of universal credit. The child elements are intended to allow families to meet their children’s basic needs. How dare this Government discriminate against a third or fourth child? No matter how many children a family chooses to have, the Government should not discriminate against any child.
Neil Gray
Alongside the rape clause, which my hon. Friend the Member for Glasgow Central (Alison Thewliss) has raised repeatedly, this is one of the most disgraceful aspects of these provisions. People plan a family based on the circumstances in which they find themselves at the time. Let us take the example of two working parents. What would happen if, further down the line, having had three children, they were unable to work? The two child policy is an absolute disgrace.
Angela Crawley
I wholeheartedly agree with my hon. Friend. This Government have absolutely no right or reason to dictate to families how many children they ought to have, or to place a monetary value on a child’s life or someone’s livelihood.
This Government have scrapped the first child premium, worth £545 a year. That is the equivalent of the family element in tax credits, which was designed to help families with the extra cost of their first child. Obviously, this Government do not prioritise the need to give every child the best possible start in life. The Scottish Government and the First Minister have ensured that every new-born child in Scotland will receive a box that will allow the family to deliver the best possible care, health and support for their child. In what initially appears to be a benefit to low-income families, support for childcare has been increased from 70% to 80% of the cost. However, this policy will not compensate for the far greater losses families will see as a result of other changes to the benefits system.
That brings me to my final point, which relates to disabled claimants. Disabled individuals are often the worst off as a result of benefit reforms, and they are certainly the worst-off group as a result of universal credit. They have been wholly ignored in the process. At present, families with a disabled child can claim £60 per week through the disability element of child tax credits. Under universal credit, £29 per week of support will be claimed under disability additions, but according to the Government’s own estimates, this means that 100,000 disabled children stand to lose more than half their entitlement. How can the Government look at those figures and honestly justify their actions? Disabled lone parents with young carers stand to lose £58 per week as a result of the loss of the severe disability premium under universal credit. Again, this Government have failed to take those individuals into consideration. Lone parents and those under 25 are likely to lose up to £15 per week as a result of reductions in standard allowances for those groups under universal credit.
The Government must commit to fairer arrangements, especially for those most at risk. While they continue to balance the books on the backs of the poor, many more children will continue to grow up in poverty. While they continue to allow tax avoiders and big business to benefit, those who work hard to put food on the table for their loved ones will continue to lose out. When will this Government learn? The fact is that one child growing up in poverty is one too many.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
We have had an unexpectedly concise, but nevertheless interesting, debate is afternoon. I echo the remarks of others who have paid tribute to the right hon. Member for East Ham (Stephen Timms) for securing the debate and giving us this opportunity to highlight the impacts that the universal credit scheme will have on children. Right at the heart of this matter are the recent cuts to the work allowance—implemented just last month—which are set to drive up child poverty quite considerably in the months and years ahead.
Back in January, when the Government performed their U-turn on tax credits, it was clear that the relief would be only temporary for many families. As we have heard today, the transition to universal credit will mean that 3 million working families will no longer be eligible for the support that they would have had under the tax credits system. A further 1.2 million working families will still receive support, but will be worse off. Therefore, according to the Resolution Foundation, 4.2 million families will be on average more than £40 a week worse off, even taking into account increases in the minimum wage and tax allowances.
When universal credit was first introduced, we were told that it would simplify and streamline our benefits system, that it would introduce greater flexibility for those in seasonal jobs or with fluctuating earnings and, crucially, that it would remove the financial disincentives to work created by the previous system. However, that is not what is happening in reality. The introduction of universal credit has simply been an excuse to cut family incomes, taking £3 billion a year out of the pockets of low-paid parents. As the Resolution Foundation report puts it, the latest cuts to universal credit risk leaving it
“little more than a vehicle for rationalising benefit administration and cutting costs to the Exchequer.”
That is a truly damning indictment.
The bottom line is that cutting the work allowance under universal credit has destroyed the very aspect that reduced work disincentives—the thing that made it a distinctive policy. The most potentially valuable aspect of universal credit has been butchered, and we are now left with a system that will reduce the incomes of more than 4 million low-income families. People are already working hard to support their families and are struggling to make ends meet. The change is set to send child poverty skyrocketing over the next few years. Far from creating work incentives, the reality is that cuts to the work allowance mean that parents in low-paid jobs face staggering levels of marginal taxation if they take on extra hours. There is no way around the fact that that reduces the incentive to take on extra work. If someone is going to be only 35p in the pound better off per hour, the extra earnings might not even cover their transport costs, much less their childcare.
Working single parents will be particularly badly affected by the changes, because they are being hit with dramatic income cuts. There is also a big disparity between those who live in rented accommodation and those who are owner-occupiers or otherwise not paying housing costs. In rented accommodation, a working couple with children will lose £234 a year, and a working single parent will lose £554 a year. The reductions in income are even starker for those not in rented accommodation. A working couple with children will lose more than £1,000 per year, but working single parents are set to lose a massive £2,628 a year on average.
Angela Crawley
A single parent already working full time on the national living wage—otherwise known as a modern increase on the minimum wage—of £7.20 an hour will have to work an additional 46 days a year, equating to two additional months. Does my hon. Friend agree that that is unacceptable?
Dr Whiteford
It is not only unacceptable, but completely unrealistic. When the measures were first debated, the Government tried to argue that families affected by the losses could simply work a few extra hours to cover the shortfall. Notwithstanding the availability of extra hours being entirely dependent on the employer’s circumstances—there might not be many extra hours going around in many workplaces at the moment—the Child Poverty Action Group pointed out, as did my hon. Friend just now, that a single parent working full time on the minimum wage would essentially have to work an extra day a week just to make up the shortfall. It is already hard for single parents to manage full-time work and family responsibilities, and I just cannot believe that it is good for them or their children for them to be taking on an extra day a week. Something has to give. People’s health will collapse. People’s children and family life will suffer. It is not the right thing to do.
The effect on families affected by disability will be disproportionate. At Work and Pensions questions yesterday, I mentioned the impact that the introduction of universal credit will have on disabled children. Some time ago, the Children’s Society and Citizens Advice published “Holes in the safety net”, a report which warned that the introduction of universal credit would mean dramatic cuts in support for some disabled children. Some 100,000 disabled children in the UK are likely to be affected and will see their support halved to just £29 a week. As we have heard today, families with a disabled child are twice as likely to be low-income families living in poverty. We know that. We also know that those who live with a significant disability face extra living costs, but it is sometimes too easy to gloss over the realities of day-to-day life for such children, their parents, and their brothers and sisters. Disability affects the whole family.
Some time ago, I worked for Carers Scotland and will never forget my conversations with parents of disabled children about their experiences, many of which were positive, but nevertheless also often enormously challenging, both financially and emotionally. I remember one working mother describing how she had had to give up a full-time professional career and work part time in a lower-paid job, simply because she could not find a nursery willing and able to take on the complex needs of her little boy. I remember another mother talking about realising that she would have to become a full-time stay-at-home parent after her second child was born with quite significant physical disabilities. She and her husband had recently bought a three-bedroom house to accommodate an expanding family, but they had to sell up and downsize, because that was all that they could afford on one income. At the very moment when they needed more space to accommodate growing toddlers and a wheelchair and to enable their elder child to sleep through the night without being woken up by a disabled sibling who needed care during the night, they were instead struggling to make ends meet. Families such as those, for whom £30 a week makes an enormous tangible difference to their quality of life, are being put on the front line.
On the other side of the coin are the cuts under universal credit to the severe disability premium paid to disabled adults, affecting some 25,000 children who live with a severely disabled parent. The level of support will be £58 a week less for such families. Even those in the ESA support group—those who have absolutely no prospect of being fit for work—will be entitled to £28 a week less than under the current system. That will inevitably have an impact on the children in those households, most of whom do not get any extra support at the moment, and it will make life even harder for young people who in some cases are already taking on age-inappropriate levels of domestic responsibility. The Government talk a lot about improving life chances, which we have heard again and again today, but slashing support for disabled children and the children of severely disabled adults who have no prospect of work will only harm those children’s already diminished life chances.
I asked the Government yesterday if their intention really was for low-income families and disabled children to bear the brunt of their cuts agenda. We have heard lots of suggestions today, such as those put forward by CPAG, the Children’s Society, the Resolution Foundation and others, for how the failing universal credit project could be redeemed, not least the need for a credible and up-to-date assessment of the overall impact on child poverty. Instead of trying to defend the indefensible, the Government have an opportunity to go back to the drawing board on universal credit and restore its original policy intent of supporting low-income working families. If they fail to take that opportunity, they will be confirming their reputation as the sort of people who think it is okay to make disabled children and hard-working parents in low-paid jobs pay for the tax breaks being enjoyed by the wealthiest in our society.
Nick Thomas-Symonds (Torfaen) (Lab)
I am grateful to the Backbench Business Committee for agreeing to hold this debate in the main Chamber. I pay tribute to my right hon. Friend the Member for East Ham (Stephen Timms), whose erudite and considered opening speech was a great contribution to the debate. The hon. Member for North Devon (Peter Heaton-Jones) talked about the broader context, and I will be only too pleased to do the same in a moment. My hon. Friend the Member for Edmonton (Kate Osamor) spoke powerfully about the plight of lone working parents, who are particularly affected by cuts to the work allowance. I certainly agreed with the hon. Member for Gloucester (Richard Graham), who is no longer in his place, on the idea of ensuring that we visit Jobcentre Plus offices to see universal credit in action, something which I did recently with my right hon. Friend the Member for East Ham, but it is equally important to be in contact with local citizens advice bureaux and to visit food banks to see what is happening on the ground.
We heard a useful contribution from the hon. Member for Airdrie and Shotts (Neil Gray), who pointed out very well the new approach promised by the new Secretary of State of looking at people, not statistics. I look forward to the Minister telling us how she has changed her approach under her new boss, as I am sure everybody does. We also heard useful contributions from the hon. Members for Lanark and Hamilton East (Angela Crawley) and for Banff and Buchan (Dr Whiteford); my hon. Friend the Member for Neath (Christina Rees); the hon. Member for Horsham (Jeremy Quin); my hon. Friends the Members for Salford and Eccles (Rebecca Long Bailey) and for Cardiff South and Penarth (Stephen Doughty); the hon. Members for Foyle (Mark Durkan) and for Rutherglen and Hamilton West (Margaret Ferrier); and my hon. Friend the Member for Westminster North (Ms Buck).
This debate comes at a key time—a key moment of test for the new Secretary of State—because the outlook is bleak. The Institute for Fiscal Studies expects absolute child poverty to increase from 15.1% in 2015-16 to 18.3% in 2020-21. The Resolution Foundation believes that 200,000 more children, predominantly from working households, will fall into poverty this year. Gingerbread powerfully makes the point that my hon. Friend the Member for Edmonton made about cuts to the work allowance hitting single parents particularly hard. There is a set of damning statistics on this, which the Children’s Society has set out. A working single parent can lose up to £2,628 a year. What was the Government’s response to that? What did they say could be done about that? They told the Social Security Advisory Committee that parents could work three to four additional hours a week on the national living wage.
Carolyn Harris (Swansea East) (Lab)
Does my hon. Friend agree that to expect hard-working families to work an extra 200 hours a year just to make up for the cruel cuts in universal credit is an outright insult?
Nick Thomas-Symonds
My hon. Friend is absolutely right about that. The hon. Member for North Devon wanted the broader context to be taken into account, so let us take into account the national living wage as well. A single parent who is already working full time on the national living wage of £7.20 an hour will have to work 46 extra days a year, which is more than two additional working months. How on earth can that be put forward as a reasonable proposition by anybody? It obviously is not reasonable.
The Government were warned about the problems they face today as a result of cuts to universal credit. The Social Mobility and Child Poverty Commission report released just before Christmas, on 17 December, said that the “immediate priority” had to be ensuring that the cuts to the work allowance planned for this April did not go ahead, but the Government simply did not listen. The problem that they are getting to is that their approach is starting to deny the very purposes that universal credit was set up for. The Resolution Foundation states:
“But it is also much changed as a result of the increasingly tight financial restraints placed on it over recent years. These have involved more than just a reduction in the money available under UC, they have also altered the very structure of the policy—changing the composition of winners and losers and fundamentally damaging its ability to deliver against its purported aims.”
Perhaps that explains why the Government are so terrified of publishing an up-to-date impact assessment. Perhaps it explains why they are so terrified of telling us the figures as to what they expect will happen to child poverty over this Parliament.
Christina Rees
Does my hon. Friend agree that we also urgently need an analysis of the gender impact of the Government’s policy since 2010, because the design of universal credit, like that of other Government policies, does seem to have a disproportionate impact on women?
Nick Thomas-Symonds
My hon. Friend is absolutely right about that, and we all know that the brunt of the cuts has fallen on women. That is precisely what the Government should be taking into account and they should carry out such an analysis. It is not as though it would be that difficult for the Government to come up with these figures. My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) chairs the all-party group on health in all policies, whose excellent report, produced in February, made it absolutely clear that there is a danger of the progress on tackling child poverty made by the last Labour Government going into reverse as a result of what this Government are doing.
This is not, however, just about the Government’s lack of compassion on these things; it is also about their complete lack of competence. We should not forget how universal credit has been implemented. On 1 November 2011, the former Secretary of State told us in a press release that there would be no fewer than 1 million people claiming universal credit “by April 2014”, but by November 2015 the actual figure was 155,568, which, by my reckoning, is less than a fifth of the target he had set himself in 2011. The day on which the roll-out is to be completed seems to be forever going back. When I was younger, my great aunt and uncle used to own a pub, in which there was a brass plaque just above the bar saying, “Free beer tomorrow”. The problem being that every time people went in it still said, “Free beer tomorrow”. I am afraid that that is where we are getting to with universal credit: six years later, we are still waiting for it to be implemented.
This is not just about the speed of the implementation; it is also about the risks that the Government have identified. Let us also not forget the universal credit risk register, whose disclosure the Government, again, fought tooth and nail against. They were forced to disclose it; they love spending legal fees on defending the indefensible. It identified 65 open risks to the programme, including that of skilled staff resources not being in the right place at the risk time. The list of incompetence does not end there. The former Secretary of State made clear—this was the point made by my right hon. Friend the Member for East Ham about people being broadly the same on universal credit as on tax credits—the following when answering departmental questions:
“Here is the key: I have already said that those who are on universal credit at the moment will be supported by their advisers through the flexible support fund, to ensure that their status does not change.” —[Official Report, 7 December 2015; Vol. 603, c. 707.]
The idea being of course that the discretionary flexible support fund can make up the difference. I have with me the letter that the Department is sending out on this issue. I do not know whether the Minister has seen this, as the rumours are that since she declared for British exit she does not get to see all the documents in her Department—I am happy to show it to her if she has not. It sets out what the new amount of money is, but there is not one mention of the flexible support fund.
When we are talking about incompetence, it is almost as though some Department for Work and Pensions Ministers have been in competition with each other. We will have to give the top award to the Under-Secretary of State for Work and Pensions, the hon. Member for North West Cambridgeshire (Mr Vara), although I feel bad in doing so because he is only a part-timer in the Department. However, his answer on mitigating the effect of cuts was as follows:
“let us not forget, the fact that every time we fill up our tank with petrol there is a saving…because of the freezing of the fuel duty.”—[Official Report, 6 January 2016; Vol. 604, c. 342.]
If the answer in 2016 from the Tories to those who lose out is, “Go and fill up your car”, it shows how out of touch they are. I picked him out for the top spot in the incompetence league, but in recent months the Minister for Employment has become used to missing out on the top spot. [Interruption.] I will certainly carry on.
The problem is that naked politics is interfering with universal credit. Do not take my word for it; take the word of the former Secretary of State who, when interviewed on the Andrew Marr show on 20 March, said that
“it looks like we see benefits as a pot of money to cut because they don’t vote for us”.
Let us never forget that, because what it says to children in poverty is that we are only interested in their parents if they voted for us or are likely to vote for us at the next election.
What else did the former Secretary of State say about what was happening to the Government’s social security changes? He said this:
“There has been too much emphasis on money saving exercises and not enough awareness from the Treasury, in particular, that the government’s vision of a new welfare-to-work system could not repeatedly be salami-sliced.”
We heard even worse from him, including his damning criticism of the Treasury:
“I am unable to watch passively while certain policies are enacted in order to meet the fiscal self-imposed restraints that I believe are more and more perceived as distinctly political rather than in the national economic interest.”
Any arguments made today by the hon. Member for Gloucester that these cuts are about a reduction in our deficit were blown apart by what was said by the former Secretary of State. What he was saying is that it is all about the politics and career of the Chancellor.
Mark Durkan
Does the hon. Gentleman also remember that the former Secretary of State made it very clear that the Treasury was imposing the cuts through the welfare cap, which, unfortunately, was supported by both sides of the House in the last Parliament? Now, however, that cap has become the search engine for cut after cut, and, given that even he was expressing criticism of it, it does need to be addressed.
Nick Thomas-Symonds
Yes, it does need to be addressed. As ever, the hon. Gentleman makes a distinctly useful contribution to these matters.
There is no greater moral and economic purpose that we could have in this place than eradicating child poverty. In 1999, the Labour Government promised to do that by 2020. To do it and to achieve it is to ensure that every single child has the ability to unlock their potential regardless of their background.
The European Union—dare I say it—has pledged to take at least 20 million out of poverty and social exclusion by 2020. I very much fear that the Minister for Employment wants not only to leave the European Union, but to pursue policies that will plunge more people into poverty by 2020 than would be the case if we were inside the European Union. The levels of child poverty today are a damning indictment of this Government. They bring shame on this country. The Government must act urgently, and I commend this motion to the House.
The Minister for Employment (Priti Patel)
I welcome the debate and congratulate the right hon. Member for East Ham (Stephen Timms) on both securing it and making an incredibly thoughtful contribution. I want to put my tributes to him on the record, especially as I have spent time with him in Committee. He mentioned the early stages in the development of universal credit and the first Welfare Reform Act 2012. I was also on that Bill Committee and know that he made some notable contributions to the discussions on universal credit and on the changes that the Government were undertaking at the time.
I also want to thank Members from all parts of the House—my hon. Friends the Members for North Devon (Peter Heaton-Jones) and for Gloucester (Richard Graham), and the hon. Members for Edmonton (Kate Osamor), for Airdrie and Shotts (Neil Gray), for Lanark and Hamilton East (Angela Crawley) and for Banff and Buchan (Dr Whiteford)—for contributing to this important discussion. I will come on to the points that they made a little later.
Before I move on to the details of universal credit, it is probably worth setting out the Government’s commitment to—yes—universal credit and also to what has been at the heart of universal credit and our welfare reform changes. Universal credit has been revolutionising the welfare system by focusing on making work pay, and I will go into detail on the points that have been made about incentivising work.
For the first time, we are helping people not only into work, but to have personalised support while they are in work. We are seeking to transform individuals’ outcomes when it comes to employment support. We want to ensure that they are supported in work and have sustainable employment outcomes as well. That has been very much at the heart of our welfare reforms. When we discuss universal credit in the broader sense, it is important to recognise that it has been instituted and developed so that it is easier to start work and to earn more, and that is because of the personalised support that it offers. Under the old system, there was little or no support when someone started work.
Universal credit provides for a Jobcentre Plus work coach. As Members have said, work coaches are focused on providing support and in-work progression. Universal credit mirrors the world of work. Like most jobs, universal credit is paid in a single monthly amount. It aims to make work pay. It stays with the claimant after they move into work. On top of that, universal credit is part of a package of reforms that runs alongside the introduction of the national living wage.
There were comments about the delivery of universal credit. What we have seen is that the national roll-out is now complete and that the digital service for all claimants will start to roll out nationally from May. Once completed in June 2018, it will no longer be possible to make newer claims from legacy benefits. We have been very focused on the agile delivery of universal credit. Just yesterday, my right hon. Friend the Secretary of State re-emphasised the fact that we would rather have an agile delivery of universal credit than a big bang approach, which more often than not jeopardises the delivery of our benefit system. [Interruption.] Does the hon. Member for Pontypridd (Owen Smith) have something to contribute, or is he just chuntering for the sake of it? [Interruption.] It is a well-developed system, and I am sure he is shaking his head in acknowledgement. The fact is that universal credit is in every jobcentre. The vast majority of claimants are now receiving support that, obviously, did not exist under the legacy system.
Nick Thomas-Symonds
Can the Minister define agile delivery, and will she tell us how universal credit will take into account the 65 open risks that have been identified in the universal credit programme?
Priti Patel
The hon. Gentleman is talking about the risk register that was published many years ago. Let me explain agile delivery. This is a system that is adapting. It has adapted following feedback from work coaches. The delivery is the test of the system. All Front-Bench Members will be familiar with this, as we have been very public about it. We have taken the insights from the delivery so that we are supporting people. The reality is that universal credit is out there and is supporting people in work, and we are seeing positive benefits as well.
I am very conscious that a number of points have been made about child poverty, which, of course, was subject to much debate in the Welfare Reform and Work Act 2016. For the first time, the Government have a statutory obligation to report annually on worklessness and educational attainment, because they are two factors that have the biggest impact on child poverty and children’s life chances. Previous debates on poverty have focused purely on the symptoms of poverty, rather than on the root causes. We now believe that, through our commitment to ending child poverty and improve life chances, our two measures will ensure that there is real action in the areas that will make the biggest difference to poor children, both now and in the future.
We have also committed to publishing a life chances strategy, and it will set out a comprehensive plan to fight disadvantage and extend opportunity. It will include a wider set of non-statutory measures on the root causes of child poverty, including family breakdown, problem debt and drug and alcohol addiction.
When the strategy is published, I will be working not just with my colleagues on the Conservative Benches, but with all Members of the House, as this is such an important issue. The hon. Member for Edmonton talked about it, and I am alarmed to hear how high her constituency is ranked in terms of child poverty. We will need to develop the right ways to tackle these deep-rooted social problems and work collectively to transform children’s lives so that ultimately they too can reach their full potential. It is important that all Members work constructively towards that aim.
Stephen Timms
What is the Government’s current estimate of the impact on the number of children growing up in poverty of the implementation of universal credit?
Priti Patel
I do not have information or data to hand on the current estimate, but the Government previously published figures on UC and child poverty. As other Members have commented on this, I will be very happy to write to them and to the right hon. Gentleman to update them on those numbers.
Owen Smith (Pontypridd) (Lab)
Does the Minister think that that figure will be more or less than the 200,000 additional children going into absolute poverty cited by the Resolution Foundation?
Priti Patel
As the hon. Gentleman has just heard me say, when we publish our life chances strategy and focus on tackling the root causes of child poverty—we are committed to eradicating child poverty, as well—we will be driving those numbers down.
John Glen (Salisbury) (Con)
Will my right hon. Friend ensure that when this life chances strategy is published, significant thought will be given to its integration with the lessons learned from the troubled families programme to ensure that the range of interventions across multiple Departments are integrated to give the best chance of success?
Priti Patel
My hon. Friend makes an important point. Of course, the point about the life chances strategy is that it will be a cross-government strategy. The focus will be integration and support. The troubled families programme has been very successful in transforming families and turning their circumstances around, supporting work and the right kind of outcomes. We are incredibly focused on and conscious of the need to integrate. Once the strategy is published, all hon. Members will see that completely.
The point about universal credit, of course, is that it removes barriers that prevent people from finding work and increasing their hours and earnings. Universal credit provides the right support to incentivise work and, in particular, removes some of the barriers that were in place, including the restrictions on hours worked, such as the 16-hour rule.
Not just in this debate but in others and in various Committees of this House, we have been very clear that universal credit claimants receive not only support from their work coaches but additional support for childcare costs. Our in-work progression trials have begun to test how work coaches can continue to provide tailored support to in-work claimants so that they can progress and, importantly, increase their earning capacity.
Dr Eilidh Whiteford
I know that the issue of in-work claimants is still at a fairly embryonic stage, but 40% of the DWP’s own staff are likely to be affected by that in-work conditionality approach. I know that various hon. Members have asked the DWP for answers on whether it will offer those staff the extra hours they need to avoid being sanctioned and having their tax credits and universal credit cut. Will the Minister comment on that now?
Priti Patel
We have been very clear that universal credit is there to secure employment opportunities and in-work progression for everyone who is on it. I come back to the wider support universal credit provides for families, which has been touched on. Parents on universal credit can claim back 85% of their childcare costs when they move into work, compared with 70% under legacy benefits. This is a significant change and means that a working family with two children can now receive up to £13,000 a year in childcare support under universal credit.
Interestingly enough, prior to the recent elections in Scotland, I met the Scottish Minister responsible for childcare to consider the development and uptake of the childcare policy in Scotland, which mirrors many of the programmes that we have in England. Affordable childcare is crucial for working families and I look forward to working with the new Government in Scotland to ensure that we can provide all possible relevant support.
Support for disabled children was also mentioned. We should all be clear—I recall debating these points in the Welfare Reform and Work Bill Committee—that there is clear recognition of the extra costs associated with disabilities. Universal credit will provide support for families with disabled children. Of course, the point about the disabled child addition is that it provides extra support for low-income families with a disabled child. We know that caring responsibilities are enormous for parents with disabled children, and we also know that those parents are less able to take up work. They therefore need greater support, and that is obviously what we are focused on.
Mark Durkan
The Minister refers again to additions and to giving extra support to children with disabilities. Of course, it is not extra or additional to what they would receive now; it is actually a reduction. Will she properly address the terms of the motion and not the fantasy world that she is trying to serve up?
Priti Patel
Let me be clear about this: the Government have been absolutely clear about protecting and supporting the vulnerable and about the support we provide for families with disabled children.
I also want to address some of the points raised about the Resolution Foundation report. It fails to take into account that the highest barriers to entering work for second earners in the current system are virtually eliminated under universal credit through, for example, increased childcare, the fact that there are no restrictions on the number of hours worked and the fact that there are work allowances for those households with children. The report also calls for a more radical focus on boosting claimants’ earnings and, of course, that is exactly what universal credit does. For the first time ever, people are getting personalised support so that they can progress in work and earn more. Universal credit ensures that people are better off for every extra hour they work. Our research shows that 86% of people on universal credit were actively looking to increase their hours, compared with just 38% of people on jobseeker’s allowance, and 77% of people on universal credit were actively looking to increase their earnings, compared with just 51% of people on JSA. That focuses on the type of support that universal credit gives through the personalised work coaches and the additional support that that provides.
I hope that I have made clear the case for universal credit. It is supporting people in work and transforming people’s lives. We already have evidence of that from the indications that I have given. I want to reiterate and emphasise that when it comes to dealing with challenging issues such as child poverty, the Government will be publishing our life chances strategy shortly. I look forward to working with all right hon. and hon. Members to tackle these fundamental issues, which are being supported by the implementation of universal credit.
Stephen Timms
I reiterate my thanks to the Backbench Business Committee and I thank everyone who has contributed, both in speeches and interventions, to what has been a concise debate, as the hon. Member for Banff and Buchan (Dr Whiteford) called it, but a valuable one.
I would like to make a couple of points in conclusion. I appreciated the Minister’s telling us that everything was now going to be fine with the universal credit IT system because it is going to be—or because it is—agile. She will remember, as I do, that in the 2011 Bill Committee we were told that that system was agile and that everything was going to be fine—because the Department had discovered “agile”. A couple of years into that system, the Government realised that it was running into the sand so they started up a new system and told us, “Don’t worry, this one is agile.” We will certainly look forward to seeing how that works out.
I am grateful to everybody who has pressed the Minister for an update on the impact of universal credit on the number of children growing up in poverty, including the hon. Member for Airdrie and Shotts (Neil Gray), colleagues on the Labour Benches and my hon. Friend the Member for Torfaen (Nick Thomas-Symonds) on the Front Bench. I am disappointed that the Minister was not able to give us a figure, but I am grateful to her for committing to write to us to set out the Government’s current estimate.
My worry is that universal credit has been so watered down and cut that it will no longer get anywhere near the objectives that the Government set for it. We will return to the subject, but the specific estimate that the Minister has committed to providing will be a helpful piece of information for us to continue to assess the impact of universal credit on children.
Question put.
There being no voices for either the Ayes or the Noes, Mr Deputy Speaker declared the Question negatived.