Universal Credit (Liverpool)

Tuesday 11th September 2018 Westminster Hall

11:00

[Dan Carden (Liverpool, Walton) (Lab)]

I beg to move,

That this House has considered roll-out of universal credit in Liverpool.

It is a pleasure to serve under your chairmanship, Ms McDonagh, although in this debate it will not be possible for me to do justice to the magnitude of concerns that have been raised with me about the imminent full roll-out of universal credit across Liverpool. Disability charities, trade unions, civil servants, housing associations, private landlords, advice agencies, food banks, local councillors and the local authority have all provided me with briefings, statistics and case studies, for which I am grateful. Together, they paint a bleak picture of what lies ahead this autumn.

Starting this month, and continuing into November and December, jobcentre by jobcentre, full service universal credit will be rolled out across my constituency. I am here because of the people I have met in my surgeries and food bank visits, and because of the harrowing stories I have been told. I am here because of the people I have seen—people who are broken and who feel worthless and trapped in a cycle of poverty that they cannot escape. The roll-out of universal credit is only the latest onslaught from a benefits system that is stuck in Victorian times; it is just the latest instalment of austerity for our city—a city that has borne the brunt of eight years of cuts that have hit the most deprived areas the hardest. Our local authority budget has been slashed by 64%—£444 million since 2010—and 40% of children in my constituency are growing up in poverty.

According to the Joseph Rowntree Foundation, Liverpool has the second highest level of destitution of any city in the UK, and there is a lack of basic essentials, including food, shelter and toiletries. That is the climate in which the Government are imposing their flagship welfare policy—a policy that had cross-party support when it was launched in 2011, but is now a byword for institutional incompetence. It is six years behind schedule, universally unpopular and, according to the National Audit Office, likely to cost more than the system it replaces.

[Maria Eagle (Garston and Halewood) (Lab)]

I have a case of a mum who has started a new relationship, and consequently she has been put on to universal credit because her partner, who is from another area, is already on it. Her tax credits were stopped at the end of May, but by 31 August her application still had not started to be administered. If it were not for the mayoral hardship fund, Liverpool’s citizen support scheme and Can Cook, which have fed the family for two months, that family would be absolutely destitute. Has my hon. Friend heard of similar experiences in his constituency?

[Dan Carden]

I will come on to some of the case studies and personal stories that I have been told. Well-documented design flaws and unresolved administrative issues have seen tens of thousands of claimants plunged into debt arrears and reliance on food banks. My casework is already loaded with people who are struggling to make ends meet, and piling universal credit—a policy that Citizens Advice has called a “disaster waiting to happen”—on to an economic situation that is already bordering on crisis will lead to levels of hardship not seen in the city since the 1980s. This is the last chance to apply the brakes, stop the roll-out of universal credit, and fix the flaws in its design and delivery.

Universal credit lists its stated aims as: to improve work incentives, reduce poverty and simplify the benefit system, making it easier for people to understand, and easier and cheaper for staff to administer. Who could disagree with that? However, the National Audit Office found in June that:

“Universal Credit is failing to achieve its aims, and there is currently no evidence that it ever will.”

Worse still, the evidence on the ground in areas where full service universal credit has been rolled out is clear: not only is universal credit failing to meet its aims, but it is having the opposite effect. It is punishing those in work, exacerbating poverty, and creating an unwieldy, arduous and inefficient system that increases pressures on claimants and staff alike.

[Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)]

I congratulate my hon. Friend on securing the debate. One flaw in the system concerns the rigidity of the assessment period. I am in correspondence with the Minister of State for Employment on behalf of one of my constituents who is affected by the rule that means that if two sets of earnings are covered by one assessment period, the claimant will get nothing or a reduced amount for the next period. My constituent is already worrying about how she will afford Christmas. Surely that cannot be acceptable in this day and age.

[Dan Carden]

It is absolutely unacceptable, and Ministers know that the system has major structural problems. Payment of universal credit is 35 days in arrears, which results in the common requirement for an advance payment. One local member of Department for Work and Pensions staff called the five-week wait a “scandal in itself”, and in practice it can take up to 12 weeks before claimants are paid the correct amount. That staff member also told me that the so-called advance payments put claimants even further in debt, because future payments are reduced by up to 40% to claw the money back. That corresponds with data released by Citizens Advice, which shows that more than half its clients who receive universal credit were forced to borrow money while waiting for their first payment. Other problems include payment as a single lump sum, including housing costs, which causes households to choose between rent or food, especially at the outset of the claim.

There is also the online system. We know that 17% of people who earn less than £20,000 never use the internet—I have met people in that situation. One in five disabled people, and two in five of those with learning disabilities, do not have access to the internet, and the DWP’s own analysis shows that just under half of all claimants are unable to register their claim online. How have the Government prepared for the online roll-out in Liverpool? By closing four jobcentres—including two in my constituency—and eight across Merseyside, in the very areas where claimant rates are highest. It beggars belief to take away the very facilities that were established to support those seeking work.

Despite cuts, our local authority has set aside £50 million to protect the most vulnerable people. We have, I believe, one of the best benefit support services in the country, so that when people are in crisis, they can at least access emergency financial support such as discretionary housing payments, the mayoral hardship fund and crisis payments. Liverpool’s benefit maximisation scheme costs £3 million a year, and its specialist advisers last year helped to secure an extra £10.5 million for Liverpool’s families. No ring-fenced money has been provided by the Government for that—the money comes from general funds and reserves. In the last two years, £1 million has been spent topping up discretionary housing payments, and stopping countless people losing their homes before the roll-out of universal credit has even taken place.

Austerity has decimated our local council services, yet for years the local authority has acted as a sticking plaster for the worst effects of austerity. This autumn’s roll-out of universal credit is expected to rip that away, and I am told that it will simply no longer be able to cope. One problem is that the DWP does not currently share data with local authorities, which means that it is impossible to identify and support people with differing needs for support. It shifts the burden of responsibility on to vulnerable people to seek out support services themselves, and the tragic reality is that we simply will not find those people until it is too late—until they have lost their home, until they are on the streets, until we find them in A&E, or until they simply become one more suicide statistic.

We know that nearly three quarters of housing association tenants on universal credit are in debt, compared with less than a third of all other tenants. Riverside Housing Association told me:

“The time of planned rollout is particularly worrying as it comes ahead of Christmas, a time when historically our tenants often struggle financially due to the additional heating costs and the festive season—with debt and arrears increasing.”

The Trussell Trust reports that in the past year food bank referrals rose by 52% in areas where the full service of universal credit was introduced in the previous 12 months, compared with a 13% rise across the UK as a whole. North Liverpool Foodbank says that changes to benefits are the most common crisis suffered by families, and that is before the full service has been rolled out.

In the local private rented sector the situation is even more critical. I spoke to a letting agent based in my constituency who told me that 100% of the agency’s tenants who are on universal credit are now in rent arrears—every one of them. Letting agents complain of ongoing issues in securing direct payment of housing costs under universal credit, even when the tenant has given explicit consent. I was told that one tenant on live service universal credit was £700 in arrears and was moved on to direct payment; then, as soon as full service was rolled out in Bootle, a neighbouring constituency, the direct payments stopped again. The tenant is now £2,500 in arrears. The letting agency told me, as others have, that it is at the point of refusing universal credit claimants altogether.

I do not need a crystal ball to tell the Minister that if the roll-out continues and the Government press ahead, there will be even more people living on the streets. More than 90% of local authorities surveyed by Crisis said they expected the roll-out of universal credit to increase homelessness. Rough sleeping in England has already more than doubled under the present Government. Let us remember that the first claimants to move on to universal credit were single unemployed jobseekers—the so-called easy cases. This autumn people with much more complex circumstances will transfer on to the system. It is a sobering thought that the worst is yet to come. It is a scandal for Ministers to proceed when basic failures in the system have not been fixed.

[Mike Wood (Dudley South) (Con)]

I understand the hon. Gentleman’s quite legitimate concerns, but perhaps I can offer a little reassurance following the roll-out that has already happened in Dudley. Many claimants and the jobcentre—particularly in Stourbridge—are seeing that universal credit gives extra flexibility to help cases that simply would not have received the help and appropriate support they needed under the old system. More people—precisely the kind of difficult cases that he refers to—are getting into work and staying in work.

[Dan Carden]

I can tell the hon. Gentleman categorically that that is not the experience of people moving on to universal credit. The evidence I am giving in my speech does not back it up.

Analysis by Citizens Advice shows that a self-employed worker earning £9,750 a year would be £630 worse off under universal credit than an employee with an identical annual income but paid a regular monthly salary. It is astounding that the Government have overseen an increasingly insecure jobs market, based on bogus self-employment and agency and zero-hours jobs, while putting in place a welfare system that leaves the workers who do those very jobs hundreds of pounds worse off each year.

There are also changes to the work allowance. Mary is a hard-working single parent of three children in Liverpool and under the old system her income was topped up with £48 child benefit each week and a universal credit payment of £885 a month. After the changes, Mary’s salary and child benefit remained the same but her universal credit was cut by £219 a month. It is just another family pushed into hardship.

Yesterday I visited a constituent called Ann, who went on to universal credit when she lost her job as a cleaning supervisor in New Brighton in July 2015. She phoned the Department for Work and Pensions the next day to register a claim and was asked to attend a local jobcentre in Everton. She attended and was advised that she would need to go online to register, but she explained she had never had access to a computer or training in the use of one. She was asked whether she had a relative she could get assistance from. She was never once offered assistance in completing the application, even after she admitted lacking the skills to do so.

Ann attended a universal credit appointment on 18 August and received her first payment on 21 September. She went 10 weeks without receiving any payments and when she was in distress was told to attend the local food bank. She sought the support of local councillors in their surgery, because of the humiliation she felt at her situation and her lack of food. After her claim was live, she had three consecutive months of sanctions because of bewilderment at the system, and lack of understanding of the digital diary. She was then informed that she had to travel to look for jobs, but without any offer of travel expenses up front—all expenses had to be claimed back through receipts.

Ann summed up the experience as humiliating, degrading and utterly confusing—and she was one of the easy claimants selected for live roll-out. She was one of thousands in the city who will have followed a similar path from factory work decades ago to low-skilled work more recently, and who are now on the jobs market with no computer skills to enable them to navigate the system. I am sick of living in a society where we punish people because a broken economy does not provide them with decent jobs. What looks good to Ministers on paper is in reality asking a 60-year-old woman who has worked all her life to spend hours each day walking around a city handing in CVs in shops, begging for jobs. I do not think it is humane or worthwhile for society to be in that position.

I am here today to ask the Minister to apply the brakes—to stop the roll-out of universal credit in Liverpool and fix the flaws in its design and delivery. Outside Whitehall there is total acceptance that the current system will cause untold misery and push communities to breaking point across Liverpool. The Government have thrown away cross-party support for a new benefits model that would simplify the welfare state, and instead have caused chaos. Universal credit could be accepted, but only if it worked as originally intended. Ministers must remove the mandatory waiting period of 35 days; provide additional ring-fenced funding for local authorities based on local need; reverse the cuts to the work allowance and family premium; make sure that families making a claim for universal credit are at least as well off as they were under the previous system; remove the freeze on the benefit allowance and make sure welfare support reflects the needs of families; withdraw the disastrous two-child policy; and carry out a full cumulative impact assessment on the impact of welfare reforms at a local level. Finally, they must ensure that universal credit really does “make work pay”, while also carrying out the statutory duty of care to citizens.

The director general for the universal credit programme is Neil Couling. According to the ministerial code, he has responsibility for its implementation and has the power to pause it. I call on him urgently to use that power. He and Ministers have been warned about the impending crisis if they push ahead. I ask the Minister to step back and evaluate: what is the policy trying to achieve? I understand the predicament that the Department is in. It would cause a headache in Whitehall to pause the roll-out. Changes are deeply embedded, and it would be complex and expensive to stop, but that cannot mean, “Shut your eyes and hope for the best.”

Seven years ago there was cross-party agreement on the principle of simplifying the benefits system and helping people into work. However, the policy has unravelled because it was built on deeply flawed assumptions about what causes unemployment, designed in Whitehall by people who have never experienced poverty. It has become part of an agenda to undermine welfare provision and force the vulnerable and disabled to pay for an economic crisis caused by an elite. It is a joke that the Government talk about making work pay at a time when real wages are lower than they were 10 years ago. The Government have already been forced into a series of changes on universal credit. They backtracked on charging for the claimant helpline, they rolled back the six-week minimum wait—albeit only to five weeks—and they backtracked on 18 to 21-year-olds being excluded from the housing allowance. The Government know that the system is not working.

We urgently need to change the culture of the social security system from one that demonises people who are not in work to one that supports people and communities, that lifts people up rather than kicking them while they are down, and that seeks to improve the pay and conditions of those in work rather than punishing those who are not. Decent wages, lifelong learning and a patient strategy of long-term investment are how we will achieve a prosperous society. I shall continue to make those arguments in this House, but right now I have only one ask for the Minister: pause the roll-out of universal credit in Liverpool; fix it and save my constituents from the inevitable suffering it will unleash.

09:38

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I congratulate the hon. Member for Liverpool, Walton (Dan Carden) on securing today’s debate. I apologise to the House that the Minister for Employment is not able to be here, so I am deputising on his behalf.

We are introducing universal credit at a time when record numbers of people are in work and unemployment is at its lowest rate in more than 40 years. Since 2010, 1,000 jobs a day have been created, and in the north-west region more than 3.4 million people are employed, up 268,000 since the 2010 general election. The north-west employment rate is 74.3%, up from 68.7% in 2010. Nationally, according to the labour market statistics released today, the unemployment rate is now 4%—it has not been lower since 1975—and the employment rate is 75.5%, which is again a near-record high.

It is a pleasure to serve under your chairmanship, Ms McDonagh, and it is also an opportunity for me to make the point that, nationally, the number of children living in workless families is down 608,000 since 2010. As of March 2018, the employment rate of people aged 16 to 64 in Liverpool itself was 67.6%, up from 60.3% in March 2010, and in Merseyside, as of March 2018, the employment rate had increased from 64.2% before the 2010 election to 70.2%.

Turning to the points raised by the hon. Gentleman, I will try to address the issues relating to universal credit. As I am not the Minister, I may not be able to answer the specific questions raised, but, as the hon. Member for Garston and Halewood (Maria Eagle) has been artfully demonstrating to me across the Chamber, I will write to hon. Members, or the Department will write to them, on the specific questions they raised.

The Government believe that universal credit remains a vital reform. It replaces an outdated and complex benefit system; the six benefits are replaced with one simple monthly universal credit payment, designed to support people whether they are in or out of work. There is no doubt that the old system did not incentivise people to come off benefits and get into work.

[Maria Eagle]

Does the Minister accept that the administration of universal credit is chaotic? I had a constituent who ended up being sanctioned for a year after his father died and he was unable to cope with going to meetings. After my office intervened, his benefit was reinstated and the sanction was removed. He had eight letters telling him that, but when he received his first payment, which was supposed to be a back payment, it consisted of £5.

[Guy Opperman]

I cannot comment on the individual case, but it is unquestionably the case that the old system had inherent flaws and, as the hon. Member for Liverpool, Walton very fairly said in his speech, it was right for it to be reformed at that particular time. We may have a debate and a discussion about the quality of the system thereafter, but the reform of the old system was unquestionably the right thing.

Under UC, claimants are better off when they move into work and better off when they progress in work; the payment is gradually reduced as earnings increase, so claimants will not lose all their benefits at once if they are on a low income. There is no 16-hour ceiling, no 16-hour floor and no risk to people’s benefit as they move into work. It also means that the more people work, the more money they get in their pocket. We believe that universal credit lies at the heart of our reforms to transform the welfare system, because it supports those who can work and cares for those who cannot.

The UC full service is available in approximately 63% of jobcentres in Liverpool, with those remaining to be rolled out by December, as the hon. Gentleman outlined. I would urge all hon. Members to visit their local jobcentres and to speak to the staff in charge of the system, the work coaches and the claimants who are attending. I myself have visited a number of jobcentres and sat in on randomly selected interviews with dedicated work coaches. I held a jobs fair last Friday in Hexham with my Jobcentre Plus, and I am going to another jobcentre this week.

[Mike Wood]

I thank the Minister for visiting my constituency and meeting with local advocacy organisations, representative groups and local charities, who deal with people claiming universal credit on a daily basis. What lessons and messages did he receive from those organisations in Dudley, where the roll-out was completed over a year ago, about how the system has changed and improved with the tweaks that have been made?

[Guy Opperman]

The reality of the situation is that, as the roll-out takes place across the country, there are good examples, as was seen when I visited Brierley Hill in my hon. Friend’s constituency, of excellent integration—

[Siobhain McDonagh (in the Chair)]

Order. I have been generous in my interpretation of what can be said during this debate, but it is about the introduction of universal credit in Liverpool, and I would like us to concentrate on Liverpool.

[Guy Opperman]

I totally accept that, but with respect, Ms McDonagh, the integration of services is a nationwide matter, and the roll-out is happening across 430 jobcentres.

[Maria Eagle]

Would the Minister like to have a go at answering my question about administration of the benefit in Liverpool?

[Guy Opperman]

With respect, that is what I am attempting to do and intending to come to. The hon. Member for Liverpool, Walton raised the issue of local authority funding. The Department for Work and Pensions provides local authorities with UC support funding and new burden funding to take account of additional costs. The local authority should provide the data, and he should be aware that £14 million has been paid out in this tax year alone.

On the managed migration, there was a “Universal Credit programme full Business Case summary” early this year, which showed that when UC is rolled out it will deliver £8 billion worth of benefits to the UK economy every year. The hon. Gentleman mentioned Citizens Advice in his speech; he will be aware that only recently, when the changes were made to universal credit, it was quoted as saying:

“These changes should make a significant difference to the millions of people who will be claiming Universal Credit by the time it’s fully implemented.”

Similarly supportive comments were set out at the time by the Trussell Trust and others.

I will ensure that the Department writes to the hon. Member for Liverpool, West Derby (Stephen Twigg) on the specific point he raised. In relation to the lady from Everton, if he provides the detail to the Department I will ensure that a specific point is raised, and I will also ensure that the point about the constituent case mentioned by the hon. Member for Garston and Halewood is addressed.

It is important to mention that there have been significant changes and a “test and learn” approach to universal credit as it is being rolled out. Changes were made in November last year following the Budget, and the Secretary of State herself made changes in June this year. We have made a commitment that anyone we move onto universal credit without a change of circumstance will have their existing benefit entitlement safeguarded until their circumstances change. That is to accommodate the changes needed; managed migration will be completed in 2023. We have also announced that people on legacy benefits receiving severe disability premium will stay on legacy benefits until we move them, even if they have a change of circumstances, and we will look at protection for people previously in receipt of severe disability premium who have already moved onto universal credit.

[Dan Carden]

Will the Minister give way?

[Guy Opperman]

Very briefly; I have barely a minute.

[Dan Carden]

I just want the Minister to answer the points about housing associations and private rented landlords, who are saying they will no longer take universal credit claimants in the private rented sector. What is the Department going to do to talk to housing associations and landlords, and to stop a homelessness crisis hitting our city?

[Guy Opperman]

I will ensure that the Department gets in contact with the hon. Gentleman to find out the details of which he complains. He will understand that I cannot specifically answer that particular point now, but contact will be made if he provides the explanation of the specific examples that he is concerned about. It is definitely the case, though, that the individual jobcentres are working with the local authorities and with the various charities on an ongoing basis.

To finish, we are in the middle of a fundamental structural reform that is already changing lives. We will continue to work with claimants, partners and hon. Members to resolve the issues and improve universal credit as it is rolled out across the country. I congratulate the hon. Gentleman, who is a worthy successor to his predecessor, on securing today’s debate; it is definitely the case that we call on all hon. Members to get behind this particular revolutionary reform, but I am grateful for the opportunity to set out the position today.

Motion lapsed (Standing Order No. 10(6)).

11:29

Sitting suspended.