The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, by leave of the House, I shall repeat a Statement made by my right honourable friend the Secretary of State for Work and Pensions in the House of Commons regarding universal credit.
“With permission, Mr Speaker, following the announcement made by the Chancellor in his Budget speech yesterday, I would like to make a Statement on universal credit.
Universal credit is the biggest modernisation of the welfare system in a generation. It supports those who can work and cares for those who cannot. Under universal credit, people are moving into work faster and staying in work longer than under the previous system. Once fully rolled out, universal credit will boost employment by around 250,000—equivalent to around 400 extra jobs for every constituency. Universal credit was introduced to replace the complex and failed benefit system of the previous Government, which created cliff edges discouraging people from working more than 16 hours a week and trapping 1.5 million people on out-of-work benefits for nearly a decade. Colleagues from across the House have all voiced their support for the principles underpinning universal credit. It is a modern welfare system which, through one simple monthly payment, ensures that work always pays, mirrors the world of work and supports people to earn their way out of financial insecurity and welfare dependency.
As we introduce universal credit, we are constantly improving how the system works. We recently introduced changes to ensure that everyone who needs them has access to advance payments and we are making our telephone lines freephone numbers. I have consistently made clear that we would continue to introduce universal credit gradually. Of the total number of households that will eventually move on to universal credit, 9% are currently receiving it, and this will increase to 12% by February. This enables us to make improvements over time.
Colleagues have had concerns about the waiting time for the first payment. I am grateful to my parliamentary colleagues for their constructive engagement on this issue. There have been several debates here and in the other place. This Statement responds to these and fulfils the commitment made on behalf of the Government in relation to the resolution of the House on 18 October 2017. We are now offering a balanced package of improvements that puts more money into claimants’ hands earlier, ensuring extra support for those who most need it. Next month, new guidance will be issued to staff to ensure that claimants in the private rented sector who have their housing benefit paid directly to landlords are offered this option when they join universal credit.
In January, we are making two changes to advances. First, the period of time over which an advance is recovered will increase from six months to 12, making it easier for claimants to manage their finances. This will apply regardless of the level of advance claimed. Secondly, we are increasing the amount of support that a claimant can receive from up to 50% of their estimated entitlement to up to 100%, interest-free. In practice, this means that new claimants in December can already receive an advance of up to 50% of their overall entitlement, and may receive a second advance to take it up to 100% in the new year. Taken with the first payment, this means that claimants in need could receive nearly double the money they would usually get. In addition, from spring next year, we will be making it possible to apply for an advance online, further increasing accessibility for those who need it.
From February we are removing the seven-day waiting period, reducing the length of time claimants might wait to receive their first full payment. From April, for new claimants already receiving support towards their housing costs we are providing an additional payment of two weeks of their housing benefit to support them as they transition on to universal credit, helping to address the issue of rent arrears for those who most need it. This is a well-targeted measure that will support 2.3 million people, including the most vulnerable, with an unrecoverable, automatic payment worth an average of £233 each. This is a one-off investment of £550 million to ensure that universal credit supports those who need it. In April, as a short-term measure, we will change how claimants in temporary accommodation receive support for their housing costs to ensure that local authorities can recover more of their costs and can therefore continue to offer this valuable support to those who need it most. We will also consider longer-term solutions to this issue.
The majority of claimants are comfortable managing their finances. However, personal budgeting support and digital skills training is provided to claimants through universal support, delivered through local authorities. Building on this, we are exploring with Citizen’s Advice the scope for greater collaborative working to help claimants locally as they move to universal credit.
We must remember that universal credit is aimed at supporting those out of work to move into work and, once they are in work, to progress and increase their earnings. That is why, in addition to these measures, the Government have allocated £8 million over four years to conduct a number of tests and trials to support development of the evidence about what works to help people to progress in work. This is a comprehensive and wide-ranging package worth £1.5 billion, offering significantly more support than a simple reduction of the wait for the first payment to one month. To deliver the package, we have carefully revised the UC rollout plan to ensure that we continue to safely and gradually roll out this important welfare reform. I will place the updated rollout plan in the House of Commons Library. This does not change the final point at which the rollout of universal credit will be completed.
To help to ensure a smooth transition to full service, we have also decided to close new claims to our prototype universal credit live service. This will not affect any existing claims. In addition, currently any new UC claim from a family with three or more children will be routed back to tax credits until November 2018. With the extension to the rollout plan, that will now shift to the end of January 2019.
This is a comprehensive package that responds to concerns raised inside and outside the House. We have a clear objective: to ensure that as many people as possible get the opportunity to work and to maximise their potential to better their circumstances. We will continue to roll out universal credit in a steady and considered manner and, in doing so, deliver a welfare reform that will positively transform lives. I commend this Statement to the House”.
Lord Kirkwood of Kirkhope (LD)
My Lords, I am happy to follow the noble Baroness, Lady Sherlock, and I agree that the statement that we had in the Budget deals only with the journey on to—the gateway into—universal credit. I welcome the Statement. To be realistic, if the Government had not said something, it would have been impossible to resist the pressure to delay the further rollout of universal credit, and I do not agree that that would be sensible—I never have.
I have two questions for the Minister. For the reasons that the noble Baroness, Lady Sherlock, set out at length, the delivery of these changes will be difficult. Can she assure us that they will land, be locked in and operate to the benefit of claimants in future, without fear of further disruption, letdown and distress? It is a very tall order. Some of these changes start next month. Given the background to the operational implementation of universal credit, it is not unreasonable to be suspicious about the implementation of the immediate changes that have been announced, welcome as they are. Can the Minister assure us that she personally will ensure that they all work and will make claimants’ lives easier, and that she will report to the House regularly on the success or otherwise of the rollout?
But these are only gateway measures; they are only easing the transition to universal credit. The noble Baroness, Lady Sherlock, is quite right: the rising costs and fixed benefits that low-income households are facing will condemn some of these families to a very bleak future. That necessitates my second question: will the Government start planning to use some of the £3 billion annual savings within UC alone—never mind the other ongoing cuts and freezes—to ease people’s road into work by increasing work allowances and tapers? If we do not do something of that kind, it will be very difficult successfully to promote the programme of progression through work into sustainable longer-term jobs and careers.
Once the difficulties of getting people on to universal credit are overcome, and people are in a steady state of receiving their universal credit payments monthly, the next big political battle will be trying to get the Government to be more realistic about the money available to support people when they are on universal credit.
Baroness Buscombe
My Lords, I will do my best to reply to the multitude of questions. I will begin by saying that they seem to be in contrast with the response made in another place by, for example, the right honourable member for Birkenhead, who was very congratulatory about what we have achieved in this package.
Let me be clear: today’s package is worth £1.5 billion over the scorecard period, and will ensure that claimants get money, and get it sooner. We should remember that we are already spending more than £95 billion on benefits for people of working age. So all that I am hearing about cuts and how terrible it all is—all it is doing is frightening people. That has to stop.
Noble Lords
Baroness Buscombe
No, I am sorry—it is frightening people. The leader of the Opposition in another place said that 200-plus people in one area of the country—one in eight—had been evicted from their houses, but in fact it turned out to be only eight, and one of them had left his house 18 months earlier.
We have to stick with the facts. Our measure on advances means that where there is underlying entitlement, a household can have access to a month’s support within five days. I have seen it in operation in a jobcentre, where somebody who was very much in need was able to have it in a matter of hours. Housing benefit transition payment measures support housing benefit claimants’ transition on to universal credit by an average of £233. Yes, that £233 average will be two weeks’ rent, which is unrecoverable and automatic. It will be equivalent to what that person is paying in rent, and does not have to be paid back.
From January, claimants who started their UC claim in December and had up to 50% of their payment advanced will be able to claim an additional advance to bring their total advance payment up to 100% of their estimated monthly entitlement. Their repayment period may also move from six to 12 months accordingly. They do not have to take that. They may want help only with the first few months; it is up to the claimant to decide. The noble Baroness talked about going into her bank. Her bank will charge her interest. This is interest free—that must be made extremely clear.
Waiting days will be abolished from February. When we had our debate last week, the focus appeared to be on the whole operation of moving on to universal credit. In this Budget, we have dealt fairly and squarely with this issue by the measures that we are bringing forward. Waiting days will be abolished. However, the most vulnerable are already exempt from those waiting days, including care leavers, victims of domestic violence and those with serious illnesses. I also say to the noble Baroness that waiting days are not something that the Conservative Party or this Government introduced. They have existed for many years, with the exception of two years about three years ago.
We will continue to roll out our universal credit to ensure that the real improvements that it is delivering are extended to more people. Reprofiling our plans enables us to deliver significant improvements while continuing rollout.
Reference was made to debt. We are making sure that the claimant is able to access all the money they need to manage until their first payment by increasing the maximum amount of advance available. Extending the period of repayment to 12 months will enable claimants to be able to repay the advance without incurring higher monthly repayments. However, of course, in addition we already have budgeting loans—which, again, are interest free and which we have had for some considerable time to help claimants who are in need.
I would like to make a response on the housing benefit transitional payment. We can confirm that natural migration and managed migration claimants with housing benefit will get the transitional payment. We will have a short-term solution through local authorities initially before incorporating this payment into the automated system from DWP. But we do not want to wait for that—we want to get on and introduce this very substantial support.
Everyone who needs an advance can get an advance—and get one quickly. Almost 70% of people are paid monthly or four-weekly, which is why we have a monthly payment. We want to reflect the world of work in that sense, which is why we are moving people on to monthly payments in arrears.
In response to the noble Lord, Lord Kirkwood, yes, there is no question about this—not just myself but the whole team at the Department for Work and Pensions, the team running universal credit and the ministerial team are looking at this constantly. And we are not only looking at it but talking constantly to people actually on the ground, which is the most important thing. We are actually communicating twice a month. Every jobcentre is looking at how it is working and relaying its thoughts, concerns and ideas for improvement through to the Department for Work and Pensions. That is very important. That is why also we are rolling this out slowly and gradually—because we want to make sure that we get the system to be as good as possible. Noble Lords should remember that, when it is fully rolled out, about 7 million people will be on universal credit, including families, which means that we have to get the system right. This is not easy. I commend and praise those who work within the Department for Work and Pension team who are thinking through all these issues on a daily basis.
I fear, listening to members of the party opposite, that they seem to prefer the legacy system that has trapped people on benefits. By the way, if someone went on to the legacy system in the middle of December, they would get nothing before Christmas. And if we were to pause, we would have chaos—which would make people’s lives so much worse. With universal credit, people are entitled now to an immediate advance and immediate help for that which they need through the Christmas period into the new year—and then they can get another 50% advance on that first month’s payment, if they so wish.
We have been thinking this through and want to do everything that we can to support people in need. We are working to transform lives. Universal credit is a much better system than the legacy benefits that have been so discredited. With this package of measures, it will become even better in the months to come.
Lord Elton (Con)
My Lords, it is the function of Oppositions to pour cold water on the efforts of the Government, even when there are elements to please them. I think that my noble friend the Minister will agree that the noble Baroness, Lady Sherlock, made a very responsible response in an extraordinary context in which there are attacks on this policy, inside and outside Parliament, that are entirely unjustified. I wonder whether my noble friend heard on Saturday, on the “Today” programme, the assertion, widely repeated thereafter in the media, that on Christmas day 100,000 people would lose their universal credit. Can she put that straight? Since I am allowed on my feet only once, can she also tell us what is being done to steer people taking on advance payments in the direction of debt management counselling? I take the point about the dangers of increasing debt.
Baroness Buscombe
My Lords, I thank my noble friend for his support. He is quite right about the noble Baroness opposite, who, of course, knows so much about this system and the whole system of social security—and I pay tribute to her for that. But the reality is, I genuinely feel, that these attacks are unjustified, as my noble friend said. Indeed, I think that he referred to the “Money Box” programme with Paul Lewis, which stated that 100,000 people would not receive something over Christmas. That is so wrong. We are looking to “Money Box” at the moment to correct that and apologise. I have always put a lot of trust in that programme, but now I say loudly and clearly to Paul Lewis that the jury is out. I look forward to him responding in a far more positive way, because it is simply not true and is continually adding to the scaremongering.
We are hearing about people who are afraid to go on universal credit now, and that is appalling. We need to get behind the system, and we are doing everything that we can to make it work. We are trying to transform people’s lives and get them out of that system of being trapped in appalling welfare dependency, with no confidence and isolation in their lives. We want to transform their lives and we are doing everything that we can to do that.
Lord Cashman (Lab)
My Lords, I thank the Minister for repeating the Statement. After our last exchanges I dropped her a note because I think that I was rather unfair on her in my intervention. Would she accept with all sincerity that we welcome the changes? As I said in my contribution in our debate, I urge the Government to go further—because the negative cases that you see us representing are not imagined. As I said, again in my contribution, they have been brought to our attention by NGOs such as Scope, Shelter, Crisis, St Mungo’s, the Residential Landlords Association and London Councils. While it is wonderful that she visited the London Bridge centre, I encourage her to visit others. Does she agree with me that we are truly representing those cases that are brought to our attention—which, as I said in my contribution, were brought to me by the MP Jim Fitzpatrick?
Baroness Buscombe
I very much welcome the letter from the noble Lord, Lord Cashman, although, unfortunately, it has not arrived. However, I look forward to reading it when it does. I am very grateful to him. I was not feeling terribly well last week, and probably looked pained because I was worrying more about responding to an important debate than about what the noble Lord had to say—although I took very much on board what he was saying.
This is serious, of course, and we want to be clear that every single case that any noble Lord may hear about they should please send in to us. We will do our best to try to sort it, because we want the system to work. We are looking at a number of things; this is not the end of the road for our thinking through the system, as I have already said. For example, as my right honourable friend the Secretary of State in the other place made clear earlier today, we are looking at the taper rate. I know that is something that has exercised noble Lords. The Government are committed to ensuring that universal credit supports people into work but, as the Chancellor set out in his Budget, the taper rate will be kept under review and the Government will continue to consider the case for further changes. That is one example. In every other way, where we can, we will certainly look at how we can improve.
The noble Lord made reference to St Mungo’s, from which we had a response saying:
“We have been calling for a new strategy to tackle homelessness. I welcome the opportunity to work with the taskforce to end the national scandal of rough sleeping altogether. We are also pleased to see a number of changes to Universal Credit that St Mungo’s had been calling for, particularly the removal of the 7 day waiting period and extension of the repayment period for advances to 12 months”.
We have had terrific support, including from Citizens Advice, with which we are working very closely.
The Lord Bishop of Coventry
My Lords, I share with the Minister and the House a bit of local information. We find ourselves in an interesting situation in Coventry, with rising employment and yet a 30% increase in usage among those in the city—mostly single males—among whom universal credit has been rolled out. Like others, I very much welcome the changes and I am sure they will help enormously but, at the same time, I still have reservations about whether they have gone far enough and address other issues that some of us on the ground have identified.
I was glad to hear in the Statement the reference to universal support, although there were not many details about its rollout. I was also glad to hear about the partnership with CAB and other bodies; I am conscious, though, of the long queues each morning outside the citizens advice bureau in Coventry. Can the Minister say what sort of funding will be provided for universal support? In particular, on the issue of debt, which is important, will dedicated funding be made available for impartial debt advice for those who are running into difficulties?
Baroness Buscombe
I thank the right reverend Prelate for his intervention. While we are very proud of the fact that we are getting more people into work, one issue that we really must tackle and which we have been thinking about—hence our response—is the need now to focus our efforts on in-work progression. That is why the Government have allocated additional funding of more than £8 million over four years to run a suite of tests and trials inside and outside government to support the development of evidence about what works to help people progress in work—we have already had ministerial meetings to discuss this—including those who are insecure at work and women returning to the labour market. The Social Security Advisory Committee at the Department for Work and Pensions—which is entirely independent of us—has just published a report on this which is extremely helpful in terms of our thinking. We need to complement record-high employment and record-low inactivity with a labour market that increases living standards, with economic security for everyone across the country. That is why the right reverend Prelate is completely right; we have to focus on that.
With regard to debt, when someone goes on to universal credit, they will have a work coach, with personalised support and assistance. There are noble Lords across the House who have been very involved, as I have, with the passage of the single financial guidance body Bill which, at its heart, is all about financial capability. This is extremely important in complementing our work and progression of universal credit. It is about education from an early age, helping people to manage, signposting people who are in difficulty to really good support. At the moment, support comes from three different bodies, but one purpose of the Bill is to bring them into one single financial guidance body that everyone can have access to for free advice, debt support, guidance and further signposting of what might help them. I am rather proud that we have seen that through your Lordships’ House. Through its passage—I am looking at the noble Lord, Lord Stevenson—we have also sought to clarify our commitment to introducing a debt respite scheme with breathing space, which I am confident will help thousands of people who are in debt and in difficulty. Again, this Government are very proud of that and we wish the passage of that Bill well in another place.
I know that I am taking up time but, briefly with regard to universal support, we have invested £200 million in universal support and all claimants can access help with managing their finances when they come on to UC through those different channels.
Baroness Thomas of Winchester (LD)
My Lords, why are people being sanctioned so unfairly, as reported in the debates last week in both Houses, or does the Minister think those reports are being exaggerated? Is it because the people did not let the Jobcentre Plus office know that they were, say, in hospital, or that a bus had broken down? Supposing they do not have a mobile phone—are all UC claimants given a phone number to ring if they are unavoidably stopped from getting to an appointment at the jobcentre?
Baroness Buscombe
My Lords, in response to the noble Baroness, I have to say that, on sanctions, we believe it is right that there is a system in place to reinforce conditionality and to support and encourage claimants to do everything they can to move into or towards work or to improve their earnings. Imposing a sanction is not something that we do lightly. Claimants are given every opportunity to explain why they failed to meet their agreed conditionality requirements before a decision is made.
Based on last year’s data, each month, on average, fewer than 1% of ESA claimants in the work-related activity group had a sanction in place and fewer than 4% of UC claimants had a sanction in place. We are still quality-assuring the data for JSA but, in August, the DWP published a new sanctions statistics release with a revised methodology showing how many people were undergoing a sanction. This development is part of DWP’s commitment to the PAC to improve its published statistics and to be absolutely clear about what we are doing. The important thing is that we do not impose sanctions lightly; there has to be a tangible issue at hand.
Baroness O’Cathain (Con)
My Lords, I wish some people had realised how much work my noble friend Lady Buscombe has done since we were last here debating this problem—and it was a problem. It is incredible to think that nobody has said, “Well done” to her and the Chancellor and that, instead of saying that we are touchingly loyal, saying that actually we have worked at it.
Baroness Buscombe
I am extremely grateful to my noble friend for her support for what we are doing and I very much appreciate that.
Lord Touhig (Lab)
My Lords, the Minister will remember the comments made last week by my noble friend Lord Low of Dalston and myself about the impact of universal credit on people with disabilities and autism. I am sure she will be familiar with it because I have also tabled some Questions. Can we live in hope that there will now be something positive to benefit people with disabilities and autism, because we certainly have not heard anything in the Statement today?
Baroness Buscombe
My Lords, I want to make sure that I say the right thing. All I can say is that we are spending over £50 billion on disability, which is a record, and expenditure is going up. We spend over £50 billion a year on benefits to support disabled people and we are proud of that. Spending on people with health conditions is up by more than £7 billion since 2010. As a share of GDP, this is the second highest in the G7.
Almost 3.5 million disabled people are now in employment, which is really fantastic. We want to help as many disabled people as possible into work. They want to work and to be part of the world that they inhabit—that has to be our ultimate goal. But the noble Lord is right: we closed our debate last week with the noble Baroness, Lady Sherlock, saying that this is a work in progress. I entirely agree with her. It is a work in progress and it will continue to be until rollout in 2022.
Lord Cormack (Con)
My Lords, I am sure that we are grateful to my noble friend and also glad that she is feeling rather better than she was last week as, clearly, she was labouring under difficulties. We are grateful, too, to the Chancellor for responding, but can my noble friend consider very carefully some of the points that came up last week? I quoted a parish priest, who happens to be a godson of mine, who had written about sanctions and the way they were being administered, to his certain knowledge, in a very deprived urban area of Lancashire. Can we please take very careful note of what people like that say as they have no personal axe to grind but are merely concerned about some of the most deprived people in our communities? Can we listen and try to be continually responsive? This is a good beginning but we still have far to go.
Baroness Buscombe
My Lords, I thank my noble friend. In our debate last week, I remember that he referenced another contact, who said that our work coaches had targets. That is entirely wrong. Let me be clear: we have sanctions. A Work and Pensions Select Committee report in 2015 stated that sanctions are,
“a key element of the mutual obligation that underpins the effectiveness and fairness of the social security system”.
Evidence shows that sanctions have a positive impact on behaviour. This has to be seen in the context of people whose families have for generations not had work in their lives. The Select Committee is right about this issue as over 70% of JSA claimants and over 60% of ESA recipients say that sanctions make it more likely that they will comply with reasonable and agreed requirements.
That is not to say that we ignore those desperately in need. We have a well-established system of hardship payments available as a safeguard if a claimant demonstrates they cannot meet their immediate and most essential needs, including accommodation, heating, food and hygiene, as a result of their sanction. A legislative change came into force on 23 October 2017 to extend the list of JSA vulnerable groups to include homeless people and those with mental health conditions so that they can, if they qualify, receive hardship payments from the first day a sanction is imposed.
Lord Cotter (LD)
My Lords, I wish to ask the Minister two questions. As regards online training for those in difficulty, what will be done to ensure that they are capable of gaining online access? Secondly, I may have missed this but when will the costly phone line be replaced with a free line? Has that happened already? If not, it is very urgent indeed.
Baroness Buscombe
On the second point, that is happening as we speak. It has not happened in every situation but it is happening very quickly. It was wrong for anyone ever to say that it was a premium payment; it was not. There was no question of the DWP making any profit out of it. However, we are very pleased to say that we are moving to a free phone line as quickly as possible, and I know the work coaches are supportive of that. It is literally happening now, as fast as we can get our telephone lines shifted in each area.
One of the huge advantages of having work coaches—again, I have seen this in action—is they can help somebody who is in difficulty and teach them how to access the system online. Indeed, a couple of hours ago, my right honourable friend the Secretary of State said in another place that one of his constituents was very proud that, having gone online to access UC, they will now order their groceries online. That may seem a small thing for us, but for that person it was a huge step forward in feeling they were becoming part of the world we all inhabit, which is constantly changing and developing and can be quite frightening for some. We want to give people confidence through the work coach system.