Baroness Sherlock (Lab)
My Lords, I thank the Minister for repeating the Statement and for advance sight of it. We welcome the concessions, modest though they are. However, we also need to recognise the limitations of what is on offer compared to the scale of the problem, an issue to which I shall return in a moment. The decision to remove the waiting days is particularly welcome. That period was increased to seven days by the Government as a cost-saving measure and it has significantly added to the pressure on universal credit claimants. So that is good news, although it is disappointing that that will not start until next February.
It is good that people who are in receipt of housing benefit when they begin to claim universal credit will have their housing benefit payments run on for two weeks. However, I have a number of questions about that. There is quite a lot of ambiguity in the documentation—one hopes it is not studied ambiguity, but certainly it is not clear quite what a lot of these things will mean. First, can the Minister confirm that that payment will be available to anyone moving on to universal credit, not just those who are going to get moved on en masse by the DWP in what it calls the managed migration programme? I am sure the answer is yes. If it is not, that would of course mean that if you happened to live in a universal credit area and something changed in your life—you had a baby, you started a new job, you got married or divorced—you would be forced on to universal credit, and you would need that money every bit as much as someone who was moved on in a year’s time. So will the Minister clarify that?
Secondly, if it is available to those who are “migrating naturally”—as the jargon has it—as opposed to in a group, what will someone get in housing benefit? Is it two weeks of whatever they happen to be getting? For example, if I were in low-paid work and getting a little bit of housing benefit, do I get two weeks of that, even though the reason why I am going on to universal credit might be that I have lost my job and normally I would get all my rent paid? Is it two weeks of my little bit or two weeks of the amount that I would be entitled to? Who will pay that? Is it the local authority? Is it actually a run-on of housing benefit or is the DWP paying an equivalent amount from the centre? If it is the latter, will anyone have to apply for it?
On the advances, it is good that from January 2018 new claimants will be able to borrow a 100% advance on their first month’s universal credit and that all advances can then be repaid over 12 months, as I believe is the case already for those transferring in from benefits, rather than six months for new claimants. When this is discussed in another place, though, Ministers often sound as if they think that giving people access to money is the same thing as giving them money. My bank gives me ready access to money. Unfortunately, that is called an overdraft; it is not in fact extra money. The Government have created a problem by forcing poor people on to a system where they have to wait six weeks—now five—for money, and the solution that they have come up with is to make them take on more debt. In effect, the system moves them from a six-week wait to a five-week wait and a large extra amount of debt. If you can borrow twice as much money but over twice as long a period, you are still paying back the same amount each month. The fact that UC is less generous than before also means that for a whole year, as well as getting less money, you have to survive on even less because you have to repay each month some of the debt that you were given to enable you to get through the first month.
So I ask for some clarification. Will this higher advance of 100% be offered to all claimants, not just to those coming over through natural or managed migration? Will it be an entitlement? At the moment, the DWP can refuse to give you an advance if it thinks either that you cannot afford to repay it or that you have money anyway or could get it. Will everyone be allowed to do it?
Most obviously, why did the Government not just move to two-weekly payments? There is already provision in DWP guidance for some people to ask, and to be allowed, to be paid fortnightly. Why did they not let everyone choose to do that instead of creating this five-week problem? Most people will not benefit from the housing benefit extra bit and will just get a six-week wait reduced to a five-week wait.
My other big point concerns the rollout. The Minister explained that the Government will slow down the rollout of universal credit, but the various things that she mentioned come on at different times. Some things start in January, there are other bits of help in February and the housing help starts in April. Why do the Government not pause universal credit for, say, six months, so that at least by the time it starts again, all those bits of help are in place? Otherwise, if you have the misfortune to find that it comes to your area in January, February, March or April, you will not benefit from some of them, although that is not your fault. Why do they not just pause it?
The Government pledged that universal credit will be simple to access, make work pay and lift nearly 1 million people out of poverty. In the excellent debate we had last week led by my noble friend Lady Hollis, we heard that it is failing on all fronts. During that debate, with the exception of a few touchingly loyal Members on the Government Benches, Members raised a whole range of problems about universal credit, of which only the most obvious was the six-week wait. None of those have been addressed at all. There was nothing in the Budget Statement to improve the taper or restore work allowances to make work pay, nothing to deal with the mess for self-employed people on UC.
The Minister mentioned in the Statement the problem of cliff edges in the previous system, but there is nothing to deal with passported benefits. A consultation out at the moment suggests that if a family earns over a certain amount, it immediately loses all entitlement to free school meals, so an extra hour’s work can mean that you lose free school meals for all your kids. That is the very definition of a cliff edge. Crucially, there is nothing to deal with the year-on-year cut in the real-terms value of universal credit, which has been frozen, along with most other working-age benefits. So I am sorry to say that there is nothing to stop the inexorable rise in inequality—especially child poverty, which the IFS has modelled so carefully.
I really do welcome these measures, but they are modest. They are worth about £300 million a year in the context of many billions of pounds of cuts. I fear that universal credit is like a great big liner. As it steams along, the Government have put a bit of water on the fire on the deck that everybody was pointing to while not, I am sorry to say, doing anything to stop the ship heading for the rocks, having already been holed by the Treasury in successive, very significant cuts. I urge the Minister to turn her attention next to the substantial problems within universal credit.