Tuesday 22nd July 2025
(1 day, 19 hours ago)
Lords ChamberUniversal Credit Bill 2024-26 View all Universal Credit Bill 2024-26 Debates Read Hansard Text Watch Debate Amendment Paper: Committee of the whole House Amendments as at as at 9 July 2025 - (9 Jul 2025)
21:03 - Division on Baroness Bennett of Manor Castle’s amendment - Ayes: 17 / Noes: 120 - Baroness Bennett of Manor Castle’s amendment disagreed.
Baroness Sherlock
That the Bill be now read a second time.
Northern Ireland legislative consent sought.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, on top of the usual joys of a debate such as this, we are blessed today by the unusual combination of a maiden and a valedictory. I look forward very much to the maiden speech of the noble Baroness, Lady Shawcross-Wolfson, but I am very much touched with sadness that we will hear the valedictory speech of my noble friend Lady Bryan of Partick. This is an important debate for such important occasions.
This Universal Credit Bill forms part of the Government’s reforms to our social security system. Our welfare state sits alongside the NHS as a key pillar of our society. Both represent the principle that, when our people need help, they should get it. This Government’s commitment to both these pillars is absolute, but that commitment cannot mean, in either case, that reform is never possible.
I do not think that many noble Lords would disagree that some reform is needed. We have a lower rate of employment today than we had before the pandemic, and progress in closing the disability employment gap has stalled. One in eight of all our young people is not in education, employment or training. Some 2.8 million people are now out of work for long-term sickness. The number of people claiming health-related benefits with no requirement to work has increased since 2019-20 by 800,000—that is 45%. This is not just about worsening health. Claims for these benefits have been rising far faster than the overall prevalence of self-declared health conditions. So things have to change.
One problem is the structure of our current system. At present, everyone presenting for out-of-work support is put in one of two categories: they are classed as “can work” or “can’t work”. Having created this divide, the system reinforces it financially. Someone labelled as “can work” is expected and supported to find a job, and given £92 a week to live on in the meantime—less if they are aged under 25. Someone classed as “can’t work” is given more than twice as much money but little or no help to take any steps towards work.
This is an unhelpful binary when we know there are hundreds of thousands of people claiming health and disability benefits who are ready for work now, if the right job or support were available. The system is failing them and failing taxpayers. This Bill addresses the problem by rebalancing universal credit, while protecting those we do not ever expect to work from reassessment. We will underpin this by investing record amounts in employment support for sick and disabled people.
These changes are based on three rules: if you can work, you should; if you need help to get into work, the Government should give it to you; and if you cannot work, you should be supported to live with dignity. Crucially, this Bill is part of a wider package of reforms that includes that record investment in employment support for sick and disabled people, totalling £3.8 billion over this Parliament. We have published draft regulations on our right to try guarantee, so that work, in and of itself, will never lead to a benefits reassessment, to give people the confidence to try out work. We are delivering the biggest reforms to employment support in a generation, overhauling jobcentres to create a new jobs and careers service, delivering our youth guarantee, and joining up work, health and skills support at a local level. This is on top of investing billions in the NHS and moving to create more good jobs across the country, plus reforming Access to Work so it is fit for the future and working with businesses on the role that they can play in creating healthy, inclusive workplaces. We want everyone who could work to have that opportunity, not least because work is the best route out of poverty.
I am aware that the amendment tabled by the noble Baroness, Lady Bennett of Manor Castle, refers to the impacts of the Bill. I look forward to hearing her contribution, and I will try to address her concerns in my closing speech. However, it is worth noting here that, after the recent changes, we estimate that the package of benefits changes announced at the Spring Statement, revised to account for the changes to the Bill, will lift 50,000 people out of poverty in 2029-30, something that I hope the whole House will welcome. These estimates do not include any impact that our record investment in employment support for sick and disabled people may have on poverty levels.
I turn to the specific measures in this Bill. Previous freezes to the universal credit standard allowance, and below-inflation increases, have built disincentives to work into the system. The Bill starts to address this by rebalancing payments in universal credit, including through the first ever sustained, above-inflation rise to the standard allowance, which the Bill introduces through Clause 1. This will be the largest permanent real-terms increase in the headline rate of an out of work benefit in decades. It will mean that a single person aged 25 or over will receive an income boost worth around £725 a year by 2029-30. This is balanced by a reduction in the health top-up of universal credit for most new claims, with the new rate set out in Clause 2. This clause, together with Schedule 1, also sets out to whom this lower rate will and will not apply.
Existing claimants, as well as those with severe, lifelong conditions whom we never expect to be able to work, and those nearing the end of life, will continue to receive the current, higher rate of top-up. For these groups, we will ensure, through the calculation in Clause 4, that the combined rate of their standard allowance and their health top-up in any tax year will rise at least in line with inflation between 2026-27 and 2029-30. That means that the income from these benefits will be protected, in real terms, for every year of this Parliament. Clause 3 makes it possible to offer this protection and to freeze the new lower health top-up rate by removing the relevant rates from the Secretary of State’s uprating review.
Clause 5 of the Bill mirrors the changes that we are making in universal credit through Clauses 1 to 4 in employment support allowance, while Clause 6, along with Schedule 2, makes the corresponding provisions for Northern Ireland. We believe that these changes strike the right and fair balance. They allow us to build a more proactive, pro-work system for the future, giving people the right incentives and support to build a better life. They also protect existing claimants who are already familiar with a certain level of support and who might find it particularly difficult to readjust if that were to change. They protect the most vulnerable, regardless of whether they are already claiming the top-up or will do in the years to come. We will always protect the most vulnerable, which is why Schedule 1 will ensure that people with severe, lifelong health conditions will never be reassessed, preventing unnecessary anxiety and giving them the dignity and security they deserve.
As I have said before, welfare reform is not easy and it never has been, but it is really important that we get it right. That is why we always said that we would listen to disabled people, their organisations and others as we deliver our reforms. The House will be well aware that this Bill originally set out to reform the personal independence payment, PIP, as well as universal credit. However, having listened carefully to a full range of opinions in the Commons and beyond, the Government have removed from the Bill the clauses relating to PIP. We will now look at PIP in the round, within the wider Timms review. We have already published the terms of reference for this review, and we expect it to conclude by autumn next year. It will be led by my honourable friend Sir Stephen Timms, my fellow Minister, and will be co-produced with disabled people and other stakeholders as we work to make PIP fit and fair for the future.
This Bill is an important part of our wider reforms to give disabled people and people with health conditions the same rights, chances and choices to work as everybody else. It rebalances universal credit to remove work disincentives, and it gives existing claimants the security and certainty they need, while providing new protections against unnecessary benefit reassessments for the most vulnerable. There is more work to be done, and much of that is already under way, but this Bill, to become the Universal Credit Act 2025, will take us another significant step closer to fulfilling our vision of giving everybody who can work a pathway to work. I beg to move.
Lord Davies of Brixton (Lab)
If I may, I will speak briefly in the gap, principally just to—
Baroness Anderson of Stoke-on-Trent (Lab)
My noble friend has not given notice.
Lord Davies of Brixton (Lab)
Okay. I just wanted to say thank you to my noble friend Lady Bryan.
Baroness Sherlock (Lab)
My Lords, I thank all noble Lords for their contributions this evening. It has been a really interesting debate. I particularly thank the noble Baroness, Lady Shawcross-Wolfson. What an astonishing story and what an incredible heritage. I can only think that her forebears must be so very proud of her. It is a real joy to have her here with us today.
I thank my noble friend Lady Bryan. It was a privilege to be her Whip. I cannot say that I was always successful in persuading her of my point of view, but it was an absolute delight to work with her and we will miss her very much. I know that retirement for her will not mean walking away from the cause of social justice; indeed, she may be the first person to leave the House of Lords to spend more time in politics. We thank her for her contribution and we hope that she stays in touch.
Before I turn to the specific points raised, I say from the outset that this Bill is simply one part of the Government’s wider programme to reform our social security system so that it is sustainable and helps people to build a better life. That is what it is there to do, but it is part of a much wider programme. Let us bear that in mind as we go through.
Let us look at the specifics. I will try to talk on as many points as possible, but in 20 minutes I will not get to them all and I will not name everybody. I apologise in advance.
On the comments from the noble Baroness, Lady Bennett, the right reverend Prelate the Bishop of Newcastle, and others that the Bill pushes people into poverty, let me be clear that nobody will find themselves pushed into poverty as a result of the changes in the Bill. People who are claiming benefits are not going to be subject to these changes. As I said at the start, we estimate that the benefits changes announced at the Spring Statement, revised to account for changes in the Bill, will now lift 50,000 people out of poverty in 2029-30. That is without any impacts of our record £3.8 billion investment in employment support. It is absolutely the case that those who qualify in future will get a higher standard allowance in universal credit and will still get a health top-up in universal credit, albeit at a lower level than now, as a result of the rebalancing. They will also get much more support in their journey towards work.
As for those with the highest needs, we recognise that some people will never be able to work. That is why those with the most severe, lifelong conditions whom we do not ever expect to be able to work, and those nearing the end of their lives, will receive the current higher rate of health top-up when they apply, and we will not be calling people in for pointless assessments.
My noble friend Lord Rook and the noble Baroness, Lady Stedman-Scott, focused particularly on young people. We have a special responsibility to make sure that nobody is written off before their adult life even begins. That is the basis of our new youth guarantee, to ensure that all 18 to 21 year-olds can access quality training opportunities, an apprenticeship or help to find a job. That will include targeted support for, for example, young people with learning disabilities. Our youth guarantee trailblazers are already doing brilliant work, testing and delivering new ways to help young people. We are working in partnership with all kinds of organisations, including the Premier League, Channel 4 and the Royal Shakespeare Company, to engage and inspire young people on their journey towards work. Perhaps the Salvation Army needs to be added to that list now—I can take a hint from both Benches.
My noble friend mentioned mental health. I reassure him that we are expanding mental health support teams, so that more schools can offer early, specialist help. All pupils will have access to mental health support in school by the end of the decade. Through the youth guarantee, we are improving access to mental health services for 18 to 21 year-olds.
A number of noble Lords mentioned the proposal we consulted on in the Green Paper, which is not part of this Bill, as to whether we should delay access to the health top-up of universal credit until someone is 22. I make no apology that we have to explore every option to make sure that young people are making the best possible start to their adult lives. However, there was a consultation. No decision has been taken, nor will it be taken until we have had the opportunity to review responses to the consultation. I reassure the House that, if we decide to go ahead with that, the savings will be reinvested in training and work opportunities for that age group and we will consider carefully what special provisions are needed for those young people for whom the youth guarantee will never be a realistic option.
I heard the comments of my noble friend Lord Hendy and others about the questions raised by the UNCRPD. I say to the House that we take our international obligations seriously. We have had a letter, we are considering the issues raised and we will respond in due course.
The noble Baroness, Lady Grey-Thompson, made some very important points about the way we debate these questions. I share her concern that the narrative can become regrettable and focused in ways that are just not helpful to the debate, never mind to the individuals. I reassure the noble Baroness, Lady Brinton, that my honourable friend the Secretary of State—I know this because I know her well—does not believe that disabled people are work-shy and wants to give them opportunities to move into work. I want to see a much better debate all round. We have to find a way, as a country, to be able to discuss reform of social security without running into problems where either we are not able to discuss it or we are doing it in ways that cause fear and anxiety, which do not need to be there. I hope we can all work together to find ways to do that.
I was shocked to hear of the website described by the noble Baroness, Lady Grey-Thompson, identifying Motability users. We have checked and the Motability Foundation has confirmed that no data was provided to the developers and any information returned is not accurate. I am glad that the website has been taken down, but the bottom line is that that should not be happening. That is not what this is about. It is shocking.
I agree with the noble Baroness that we need to make sure that we regain trust among those who use our services. A couple of noble Lords made points on this. We made clear in our Green Paper that this is our mission. We announced that we are reviewing our entire safeguarding processes and strengthening our clinical governance. I say to the noble Baroness, Lady Scott of Needham Market, that that includes the training of assessors, because we want to make sure that we get this right. A lot of time and effort is being invested in this and we have some really good people from the clinical side who are working with us internally in doing that. I am glad that the noble Baroness found the training helpful, even if it was not as long as she would want it to be. We are moving to bring back face-to-face assessments and will record them as standard. We think that those things taken together will help make a difference to the way the assessments happen and are perceived.
The noble Lord, Lord Elliott of Mickle Fell, touched on the challenge of making sure that the right jobs are there in the first place, and he is absolutely right. We are creating good jobs across the country, including using our modern industrial strategy and investing in such things as clean energy. However, our local Get Britain Working plans are based on the recognition that we do not have a single labour market in this country but a number of different labour markets that depend on local conditions.
I say to the noble Baroness, Lady Stedman-Scott, that this Bill does what this Bill does. If she wants to find hope and opportunity, she should go out there and look at Get Britain Working, the inactivity pilots, our youth guarantee pilots, and the independent review that we have commissioned from Sir Charlie Mayfield, former boss of John Lewis, into what employers can do to create inclusive workplaces where people can stay in work and not fall out of it when they hit health problems. There is a huge amount going on beyond this.
I take the point from the noble Lord, Lord Elliott of Mickle Fell; he is not the first person to make it to me. I will share it where it can best be used. We want to find ways of making sure that there are jobs there for people who want to get into them and that we can support them to do it.
Fluctuating conditions were mentioned a lot. This is an area where there has clearly been some confusion. Let me clarify for noble Lords who are not familiar with this that the work capability assessment is not specific to a condition; it is based on the impacts of a condition rather than the condition itself. Some conditions will have different impacts on different people or at different stages of a person’s life. The assessment includes provisions to ensure consideration of how someone’s condition might fluctuate, hence the use of the terms “reliably” and “repeatedly” in some of the descriptors. This Bill does not change that. The idea that we have somehow changed that through using the word “constantly” is not the case. In some of the descriptors embedded in legislation, the concept of fluctuation in a condition is explicit within the use of those terms “reliably” and “repeatedly”. The bottom line is that, if a person cannot repeat an activity within a reasonable time, they should be considered unable to complete the task at all. I hope that is reassuring.
The severe conditions criteria are existing criteria which we are now going to use to determine who gets the higher, protected amount of health top-up. The wording in the Bill reflects how the functional tests are applied at present, and those tests take account of fluctuations. The healthcare professional has to look at how someone can undertake a task; if they cannot do it reliably and repeatedly, they should be assumed to be unable to complete it at all. I hope that provides reassurance.
NHS diagnosis came up a couple of times, so I would like to take the opportunity to clarify this. To meet the severe conditions criteria, the condition needs to be recorded somewhere in the NHS, following a proper clinical investigation and a formal medical diagnosis in line with NHS best practice. That does not mean the initial diagnosis has to be done by the NHS, but it has to be recorded somewhere in the NHS system. For a person who has a severe, lifelong health condition, their diagnosis will be in their GP record, even if it was made privately. I hope that helps reassure noble Lords.
A number of noble Lords raised the issue of unpaid carers. I once again put on record how much the Government appreciate their work and contribution. The increase to the UC standard allowance will benefit around a million unpaid carers. For any carers currently getting the universal credit health top-up, this Bill will not change that. My noble friend Lady Andrews and the noble Baroness, Lady Tyler, gave me a strong challenge on the review of PIP being co-produced with disabled people and other stakeholders. I reassure them that that will include carers’ organisations, so the voices of unpaid carers will be heard in that process.
On the two-tier system—I hate this phrase anyway, for all kinds of reasons that will be obvious—it is really common in social security when you make a significant change that some people on an existing system will stay on the old terms. Take the example of the limited capability for work premium in universal credit, which the last Government changed in 2017: people who were getting it then are still getting it today and will carry on doing so. There are only two ways to do this: either you change it overnight for everybody or you allow those already getting something to carry on getting it for a time while you change it. We cannot have both no two-tier system and no cliff edge. All this is doing is allowing people who have already got used to this to carry on with it, and adjusting it, which is the right thing to do.
The noble Viscount, Lord Younger, asked for details on exactly what the employment support will be. I do not have time to go into this now, but I reassure him that we are scaling up fast, with £600 million in 2026-27. The support we are delivering includes Connect to Work, WorkWell, nine inactivity trailblazers and access to 1,000 pathways to work advisers. I assure him that anyone affected by the reduction of the UC health top-up will be offered work, health and skills support through an adviser.
A number of noble Lords talked about the challenges we are facing in the system. It is true that making our social security system sustainable is a real objective for this Government, as it must be for every Government. That needs action on various fronts. It needs action to reduce the drivers of ill health, as the right reverend Prelate the Bishop of Newcastle said. It needs action, which we are doing, through our record levels of investment in and reform of the NHS. It needs investment in jobs in poor areas and in employment support, all of which we are doing at scale. It also needs reform of the benefits system, which we are committed to doing.
In response to the noble Viscount, who wants everything to have happened yesterday—even though I am not sure that characterised his Government’s period in office—for reforms of this scale, we need as far as possible to take people with us. I want these reforms to last for generations to come, because I want the welfare state to last for generations to come. Let us try to get this right, work together and be sensible about change. The real prize here is long-term reform and that is what we are shooting for.
A couple of noble Lords asked whether we are still saving money. Obviously, the removal of the PIP measure from this Bill will come with a cost, but the updated impact assessment shows that the Bill will still deliver some savings by 2029-30. However, the OBR will certify these as part of its next economic and fiscal outlook.
My noble friend Lady Ritchie asked what would happen to people on ESA. Existing claimants and anyone declaring a health condition before 6 April next year, and who become entitled to LCWRA because of that declaration, will get the higher rate. That includes claimants who currently receive income-related ESA and migrate to universal credit with no break in their claim. I hope that reassures her on that point.
The noble Viscount, Lord Younger, asked about fit note reform. It is not working, so through interventions such as WorkWell, we are testing different approaches to the role it can play as part of a joined-up work, health and skills system. He also asked about the right to try regulations; we aim to have those in place before April 2026. I hope that reassures him.
The noble Baroness, Lady Smith, asked about the position in Wales. Obviously, we published impact assessments that looked at Britain as a whole, because UC is reserved in Scotland and Wales, so the policies are not specific to a country—but I take her point. The Department for Communities in Northern Ireland has published detailed impact assessments as well. In response to her comments, we want to make sure that the positive changes in the Bill make a difference as far and wide as possible, but I stress again this Bill is only about the changes I have described so far. Some of our wider programmes are devolved and some are reserved, and we are absolutely committed to engaging closely with the devolved Governments to make sure we join those up, so that the benefits will spread across Wales as well as other parts of the United Kingdom.
I hope I have addressed as far as I can the points made about the impacts. On process, I know noble Lords do not like it being money Bill. I am sure noble Lords know that this was not the Government’s decision. It was a decision made by the Speaker of the House of Commons, on the advice of the authorities. I can only say to noble Lords that if Governments chose to make Bills money Bills, I suspect in all cases we would see an awful lot more of them. But this was not the decision of this Government at all.
I cannot pick up all the points that were raised. Let me say that we have published impact assessments; we are confident that the Bill complies with the Equality Act 2010; and we have engaged, and will continue to engage, with disabled people and their organisations. To be clear about the process on the Timms review, we expect it to conclude by autumn of next year and we are absolutely committed that it will be co-produced with disabled people and others to ensure that a wide range of views and voices are heard. We have already started, and will engage widely over the summer, on the details of the process and co-production. The review is reporting to the Secretary of State, but she has committed to reporting its findings to Parliament, so they will be coming here.
I hope I have addressed as many of the points as I can in the limited amount of time. I want to say a couple of things. One is that I am not ashamed to be part of a Government who listen, even if people have to shout quite loudly. Sometimes, we have to find ways of listening as carefully as we can. One of my noble friends suggested that you legislate at haste and repent a leisure. Well, we have had plenty of time to reflect on how we shape this Bill in the first place and I am really happy with it.
However, I want to stress the Bill has two parts. The PIP discussions will carry on, in the context of the Timms review, but this half of the Bill is about reforming universal credit, and that is absolutely worth doing. It is a prize worth having and we have to carry on with it. I am really proud that we have been able to push ahead and look at these details. The real difference is going to be made in the lives of people on the ground, in their engagement with our work coaches, the various services we can provide and the programmes we refer them to. We are trying to invest in getting people’s lives to be better.
In the end, we have to hope. We acknowledge that there will be some people who will never be able to work, and they should be supported. But there are plenty of other people who could have the opportunity to work if we could give them the right support and make sure they had the confidence to try a job; if we can get employers to listen and to take them seriously, and to want to bring on people with a history; if we can provide them with the skills or health support they need. We are setting out to join up all those things. For far too long, they have been separate. We have to join up health with skills, education and social security. If we can do that, the prize is enormous.
I do not want to write off people at 18. I do not want to write off people who have been given benefits for 20 years but nobody comes near them to offer help—that is not how I want it to be. I have heard the concerns around the House from different quarters and from all directions, and I understand that people worry about this. I very much hope that when not only this Bill but the Government’s programme of reforms get under way, people will begin to see that we really can make a difference—and that is a prize worth having.
Baroness Sherlock (Lab)
My Lords, social security is transferred in Northern Ireland, but there is a long-standing principle of parity between the social security systems of the Northern Ireland Executive and the UK Government. We want to ensure that Northern Ireland will also benefit from these important changes, and have included provision for Northern Ireland, engaging with the Department for Communities in the usual way regarding legislative consent.
The Northern Ireland Minister for Communities has been clear that, although the Northern Ireland Executive disagree with these reforms and therefore did not put forward a Legislative Consent Motion, it is not feasible or affordable for the NIE to diverge from the UK Government. Reluctantly, the UK Government have therefore decided that there was little choice but to proceed without consent from the Northern Ireland Assembly. This is not a decision that the UK Government have taken lightly, nor does it indicate a general change in our commitment to the Sewel convention. We will continue to engage closely with the devolved Governments as we move forward, including on the Timms review.