The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, I thank the noble Baroness, Baroness Janke, for securing this debate, and I thank all those who have contributed on this important issue. I am particularly pleased that the noble Lord, Lord Kirkwood, is back in his place.
I shall go through this at a bit of a canter because there are a lot of questions and points to cover, so I ask your Lordships to forgive me for talking rather fast.
This Government’s ambitious welfare reforms are driven by our firm conviction that the benefits system must work with the tax system and the labour market to support people into employment and higher pay. This is the only way to deliver a sustainable, long-term solution to poverty, and it is also the best way of giving everyone the chance to succeed and to share in the benefits of a strong economy.
Our record on employment is therefore vital to our success in helping people out of poverty, and we are rightly proud of it. There are now over 3.6 million more people in work compared with 2010. Unemployment is at its lowest rate since the 1970s, having fallen by more than half since 2010, and this has not just happened in London and the south-east: more than 60% of the employment growth since 2010 has occurred in other parts of the UK.
Importantly, around three-quarters of the growth in employment since 2010 has been in full-time work, which, as the evidence shows, substantially reduces the risk of poverty. Wages have consistently outpaced inflation for 15 months—in fact, they are growing at their fastest rate for a decade—and the growth in employment rates has overwhelmingly benefited the poorest 20% of households. Household income inequality is also lower than it was in 2010.
Of course, behind these statistics are people whose mental health and well-being are improved by moving into work and having the dignity and security that that brings. Indeed, 930,000 more disabled people are in work today compared with five years ago, and there are 667,000 more children in working households compared with 2010. Not only are these children less likely to grow up in poverty but their life chances are significantly better. The evidence on this is very clear.
A working-age adult living in a household where every adult is working is about six times less likely to be in relative poverty than one living in a household where nobody works, and a child living in a household where every adult is working is about five times less likely to be in relative poverty than a child in a household where nobody works. Children in workless households are twice as likely to fail at all stages of their education as children in working families. Full-time work in particular dramatically reduces the risk of being in poverty. There is only a 7% chance of a child being in relative poverty if both parents work full-time, compared with 66% for two-parent families with only part-time work.
Universal credit is of course at the heart of our reforms. It is a benefit fit for the 21st century that will remove the structural disincentives to work that were part of the legacy benefits that it replaces. It supports those who need it while providing a springboard into work—every extra hour worked is rewarded and each claimant receives tailored support from a work coach to help them find the right job for their circumstances. I would like to issue a challenge to the noble Lord, Lord Greaves. I invite him to come with me to a Jobcentre Plus, where I will show him a very different world. The “plus” is about the fantastic wraparound support that our staff give.
As the noble Lord, Lord Kirkwood, quite rightly said, mistakes will always be made; we are dealing with 7 million people. Some 1,500 iterative changes in just the last few months show that we are constantly listening and learning. As the noble Lord, Lord Shipley, said, we need a lot of changes—but we are making them and responding. Once fully rolled out, universal credit will cost £2.1 billion more per year than the legacy system it replaces. The Joseph Rowntree Foundation has reported that universal credit is likely to help an extra 300,000 members of working families out of poverty, the majority of which include someone who works part-time.
We have responded to concerns about the early rollout of universal credit by making a number of changes, as I have said. These include changes to remove waiting days, make bigger advance payments available and give extra support to disabled people. In the last Budget we announced a £4.5 billion cash boost that will make a huge difference to the lives of working families. Some of this has not yet filtered through, but it will provide extra support for people moving onto UC. In particular, we have put an extra £1.7 billion a year into work allowances, increasing the amount that hard-working families can earn before the taper is applied. So I cannot agree with the noble Lord, Lord Livermore. There is an incentive to work more; we are making work pay. This means an extra £630 a year for 2.4 million families.
We fully recognise that some claimants lack the digital skills they need to fully engage with a modern system. This is why we offer tailored, UK-wide, practical support to help ensure people receive their first payment on time when they make a new UC claim. Since April, we have partnered with Citizens Advice and Citizens Advice Scotland to introduce Help to Claim, a voluntary service which can be accessed any time until the first full, correct payment of UC is made. The service is available face to face, over the phone, online and through web chat to allow claimants to access support in the way that is right for them.
At the heart of the support that we offer to working-age claimants is an agreement that they commit to certain activities to improve or maintain their employment prospects, such as looking for work or doing work experience. We believe that it is right in principle 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.
However, we have listened and taken action to ensure that the penalties for not meeting these conditions are proportionate, particularly for the most vulnerable. Last month, we announced that financial sanctions—which noble Lords have referenced today—for welfare claimants that last for three years would come to an end, and that in future the maximum duration of a sanction would be six months. In addition, there will be an evaluation of the effectiveness of UC sanctions to consider whether further improvements can be made.
Evidence about the effects of poverty is of course vital to tackling it effectively. We have committed to finding new and better ways to analyse poverty in this country. The Social Metrics Commission’s report, A New Measure of Poverty for the UK, made a compelling case for why we should look at poverty more broadly, to give a more detailed picture of who is poor, their experience of poverty, and their future chances of remaining in or falling into it. So we are working with the Commission and other experts in the field to develop new experimental statistics to measure poverty. These will be published in 2020 and, it is hoped, will help us target support more effectively.
But getting people into work at all costs is not the limit of our ambition. We are absolutely not treating that as a panacea for poverty, as has been suggested. Our reforms are about supporting people in work so that they can progress. The Government recognise that childcare costs can affect parents’ decisions to take up work, increase their working hours or remain in paid work. We are doubling free childcare to 30 hours a week for nearly 400,000 working parents of three and four year-olds and introducing tax-free childcare worth up to £2,000 a year per child.
When people move into work, this Government want to ensure that we do everything we can to support them to progress so that they can increase their earnings and build careers. As the noble Lord, Lord Kirkwood, said, in-work progression is really important. We are working and in discussions with the Trades Union Congress and the CBI on how we can take this forward. We are going further, with two national pilots on in-work progression. One will train work coaches to help those in work to decide when and how to switch jobs and focus on achieving that ambitious step up. The other will boost our capability to work with local businesses by creating jobcentre specialists who can encourage local employers to support progression and good-quality, flexible working.
We know that there is more to do to support working people but this Government have already gone much further than previous Governments, while the Chancellor’s Spring Statement set out the ambition of ending low pay across the UK. Low pay is a key area of this subject. I listened to what the right reverend Prelate said about the two-child policy, and a lot of this is about taking responsibility in the same way as those who make really tough decisions about whether or not they can afford to have more children. We have to think about low pay. I think about the Church and other religious institutions that rely on thousands of people who work as volunteers. What are they actually living on? Are they actually being paid, and are they being paid the living wage? This is something where we must all look to our own institutions and places of work and work out what we are doing to ensure that those people for whom we are responsible are properly supported.
Universal credit works alongside other policies introduced by this Government to promote full-time employment as the way out of poverty and towards financial independence. Our national living wage, which is among the highest in the world, is expected to benefit over 1.7 million people. The increase to £8.21 from April this year will increase a full-time worker’s annual pay by over £2,750 since 2016. Our tax changes will make basic-rate taxpayers over £1,200 better off from April compared to April 2010. Taken together, the most recent changes mean that from April a single person on the national living wage will take home over £13,700 a year, which is £4,500 more than in 2009-10. I encourage all those who employ others to look to the national living wage.
The welfare system is not just about providing a financial safety net for those who need it. That is why this Government have taken wider action to support and make a lasting difference to the lives of the most vulnerable, who often face complex barriers to employment. Our department seeks to support and help into work the most vulnerable people in society, people whose ability to work is frustrated by issues such as disrupted education, a history of offending, domestic abuse or insecure housing. We are addressing the barriers specific to different groups and ensuring that universal credit works for all those with complex needs.
Again I reference the noble Lord, Lord Kirkwood. He talked about how we can do more to recognise. That is something that we are working on: we are adding more to the software so that we can recognise people with different needs. In response to the noble Baroness, Lady Armstrong, on the whole question of those sex survivors and so on, they absolutely need bespoke support.
In jobcentres, work coaches are upskilled to recognise and help claimants with a wide range of complex needs. It is easy to underestimate the great work that our work coaches do to support our more vulnerable claimants. There are so many positive stories to tell; in contrast to the noble Lord, Lord Greaves, I do not have time to tell those tales today, but we have worked hard to build trust with these claimants to help them to turn their lives around.
Over 12,000 young people leave care each year and their education, health and employment prospects are poorer than their peers’. By supporting care leavers through their difficult transition into adulthood with a series of safeguards and easements, work coaches can have a real impact on a young person’s life chances. We are also doing more to support ex-offenders in re-establishing themselves back in the community and moving into work, with around 135 prison work coaches based in resettlement prisons across Great Britain who help prisoners to gain employment on release and support benefit claims pre-release. Those work coaches are going in to talk to those in prison five weeks before their release but we are now looking to extend that, possibly to 12 or 13 weeks, so that we can really build a relationship with these people who are particularly vulnerable and help them through the process of ensuring that they have housing and support, and we can help them to think about a future with a job before they leave prison.
We have a proud record when it comes to supporting victims of domestic abuse. Those affected can have their work-search requirements suspended for up to six months under universal credit to enable them to stabilise their lives. By the end of the summer we will have a domestic abuse and homelessness advocate in every jobcentre in England. They will be able to build work coach capability in these areas and make important links with organisations in the community. We recently published two guides outlining the wide-ranging support offer for those experiencing homelessness. For example, you do not need a permanent address or ID to make a claim for universal credit.
With particular reference to survivors of domestic abuse, we are committed to providing the best possible support for all our claimants, including the most vulnerable in society. This includes those who are or have been victims of domestic abuse. As it can be difficult for individuals facing abuse to come forward, all work coaches now undergo mandatory training in how to support vulnerable claimants, including the recognition of signs of such abuse. By the summer of 2019 we will have implemented such a domestic abuse specialist in every jobcentre to further raise awareness of domestic abuse and support work coaches.
I commend the work of the noble Baroness, Lady Armstrong, on Changing Lives. We are listening and learning all the time. We absolutely accept that we have more to learn and focus on. We are looking at the issue of separate payments, for example. We must be aware—and we are doing work on this at the moment—that eight out of 10 claimants are very happy to receive just the one payment from universal credit and that 97% of couples pool their resources. To make a blanket change across the system, which looks as though it would not suit the vast majority of claimants, would be a big and possibly retrograde step. We are therefore looking at other ways in which we can support these women.
Furthermore, we are considering what more we could do to ensure that the main carer more often receives the UC payment direct, although they can actually ask for it. The initial work on this area will be completed this year and will improve the claimant messaging on the service to encourage claimants and joint claimants to utilise the bank account of the main carer to receive their UC payments. I repeat, however, that there is work in progress in this area.
Noble Lords made reference to various reports, including the IFS report, which touched on housing. We delivered over 220,000 additional homes last year. That is over 1.3 million extra homes in England since 2010. We are looking at what we can do cross-government —we have a cross-departmental project on this—to tackle the huge cost of housing benefit. Yes, it is £23 billion a year, much of it going to private landlords. We are ambitious about doing more on this huge issue.
We welcome, however, what came out last week in the IFS report, which stated that while poverty is complex and does not have an easy answer, there are two positive reasons which account for two-thirds of the increase in in-work poverty rates. One reason that a higher fraction of those on the lowest incomes are in work is simply that there are more people in work overall and far fewer workless households. This is something that Paul Johnson of the IFS, writing in the Times, described as,
“a triumph that we celebrate all too infrequently”.
The other reason is that far fewer pensioners are poor than ever before.
I will move on as quickly as I can, because my time is running out. We are continuing to listen and learn. The noble Lord, Lord Livermore, talked about tax credits as being a good idea, but they propelled many claimants into higher tax rates such that they have spiralling debts as a result. Also, in 2010, 20% of all UK working-age households were entirely workless, which was not a great record.
On the two-child policy, as I said, this policy ensures fairness between those supporting themselves solely through work and those receiving benefits. Let us not forget they also continue to receive child benefit, no matter how many children.
On the questions raised by the noble Lord, Lord Low, and the noble Baroness, Lady Thomas of Winchester, we are looking at the workplace assessments quite carefully and at PIP to see how we can make it simpler, easier, more straightforward and fairer. I also say to the noble Lord, Lord Low, that we are doing a lot on accessibility. In fact, two weeks ago I was lucky enough to be in New York with a wonderful man called Victor, who is in charge of accessibility for New York City. What they are doing there is incredible. We were sharing intelligence on more things that we can do to assist people with disabilities, including those without sight.
I now have to wind up. There is so much more that I would like to say, but I conclude by saying that we are not complacent about the challenges we face for those people on the lowest incomes and those who are particularly vulnerable. We constantly make progress, but we also constantly want to listen and to learn. We are spending a record £220 billion this year on welfare. I am proud of the work our department is doing, and I am grateful to all noble Lords who have taken part in the debate.