Universal Credit

Baroness Manzoor Excerpts

Wednesday 21st December 2016 Lords Chamber

[Baroness Manzoor (Con)]

My Lords, I thank my noble friend Lord Farmer for securing this timely debate, and I congratulate the noble Lord, Lord Macpherson, on his excellent maiden speech.

The universal credit system is one of the most radical reforms since the welfare system was set up 100 years ago. Today, as we have heard, is the Minister’s last day on the Front Bench, and I therefore take this opportunity to thank him for his tenacity, drive and commitment in ensuring that UC, despite the many challenges it has faced, has continued to progress and develop and to be rolled out successfully across the country, despite some of the delays. He has played a key part and leaves behind an important welfare reform legacy, and I congratulate him.

UC is, of course, the integration of six means-tested benefits and tax credits into a single payment. It simplifies and streamlines a complicated benefits system, along with improving its transparency, accessibility and accountability. It is worth remembering how far we have travelled. In 2010, the country was spending £4 for every £3 we were earning, the welfare bill had ballooned to unsustainable levels—£9 billion, as we have heard—and in-work poverty had increased to 20%. To address this, the UC system is designed to make it easier for people to move in and out of work, and it removes the benefit trap by tackling the financial disincentives to entering the workforce. This is to be applauded as, unacceptably, two-thirds of children in poverty live in working families. This must change.

UC is rightly designed to lift working adults and their families out of poverty by encouraging more people into work and ensuring that work always pays. However, had the cuts to tax credits gone ahead, they would have undermined this cornerstone policy. The Government must ensure that the effects of UC working allowances do not have a similar impact or unintended consequences; for example, discouraging single parents from working more hours. As we move forward and the reforms bed in, the Government must be ready to act to ensure they are not in danger of cutting the very aspect of UC that creates a work incentive.

In the meantime, UC is showing that people are taking up more employment and remaining in employment for longer than when compared with jobseeker’s allowance. In the first nine months, 71% of UC claimants moved from welfare into work with the help and support of Jobcentre Plus work coaches, and of course there is also the offer of help with 85% of childcare costs.

My noble friend Lord Freud leaves behind a huge, incentivising welfare-to-work agenda and a welfare system that must continue to be seen through the prism of work. He leaves a strong legacy for his successor to build upon, and I wish him and UC well for the future.