Baroness Tyler of Enfield debates involving the Department for Work and Pensions during the 2019 Parliament
Universal Credit
Baroness Tyler of Enfield Excerpts(1 month, 1 week ago)
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Department for Work and Pensions
Baroness Tyler of Enfield
To ask Her Majesty’s Government what impact assessment they have made of the proposed withdrawal of the £20 uplift to Universal Credit.
Baroness Tyler of Enfield (LD)
My Lords, I draw attention to my interests in the register, particularly as a member of the Financial Inclusion Commission and president of the Money Advice Trust. I very much look forward to hearing the contributions of other noble Lords, who I know feel passionately about this issue—one that goes to the heart of who we are as a nation and our moral obligations to each other. I thank the Library for its excellent briefing note setting out the context around the proposed withdrawal of the £20 uplift in universal credit.
The basic facts are as follows. In March 2020, the Chancellor announced that the standard allowances of universal credit and the basic element of working tax credit would be increased by £1,000 a year, or £20 a week, describing this very welcome uplift as a measure to “strengthen the safety net” during the pandemic. It was part of a wider package of support for family finances hit hard by Covid, including the Coronavirus Job Retention Scheme and the Self-employment Income Support Scheme. This package was generally considered to be well-judged and the right thing to do in quite extraordinary circumstances.
In March 2021, the Government announced that the uplift, initially intended to last 12 months, would be extended for a further six months. In July, the Government confirmed that they would withdraw the uplift at the end of September. What has been the impact of this and how has it been received?
Back in November 2020, the Legatum Institute reported that, although poverty had risen because of the pandemic, government policy, including the uplift to universal credit and working tax credits, “has insulated many families” from it. It estimated that the policies had protected 690,000 people from poverty in winter 2020. On the day that the withdrawal was announced, Boris Johnson told the House of Commons Liaison Committee that, as Covid-19 restrictions eased, the emphasis
“has got to be on getting people in work and getting people into jobs”.
This statement, suggesting that there was a binary choice to be made between work and benefits, completely ignored the high and rising levels of in-work poverty.
It is fair to say that the withdrawal announcement has been met with widespread criticism across the political spectrum. Among others, the Centre for Social Justice, the chairs of the relevant committees in the House of Commons and devolved assemblies, the influential Economic Affairs Committee of your Lordships’ House and, quite remarkably, six former Conservative Work and Pensions Secretaries have called upon the Chancellor to make the uplift permanent, with many calling on it to be extended to legacy benefits. Tellingly, the six former Tory Secretaries of State argued that
“work remains the best way out of poverty for those who can work, but we want to make sure that those who cannot work are supported with dignity”.
It is hard to disagree with that statement.
In September, 100 organisations, including charities, health professionals and others, called on the Government to abandon their plans to remove the uplift. They argued that the decision would
“pile unnecessary financial pressure on around 5.5 million families, both in and out of work”.
That list is not just the usual suspects; it is a much wider cross-spectrum of opinion.
Crucial to this debate, what assessment did the Government make of the impact of this highly controversial decision? There has been no shortage of calls for the Government to publish any impact assessment or analysis they have done on the effect of withdrawing the uplift. I was shocked to learn that, in response to a Written Question on 22 July, asking the Government to publish the impact assessment for the removal of the uplift, Will Quince, Minister for Welfare Delivery, said,
“no assessment has been made”.
I ask the Minister if she will explain whether such an assessment is now available and, if not, why not, when it will be published and, ideally, what it says. Is there any truth to the report in yesterday’s Financial Times that an internal Whitehall analysis says that the Government should be braced for a “catastrophic” end to the welfare uplift?
Given this gaping hole, various organisations have produced their own analysis of the potential impact, including the Joseph Rowntree Foundation and Citizens Advice—both highly respected organisations. Among others, these assessments have commented that 6 million low-income families will lose over £1,000 from their annual incomes; 0.5 million more people will be pulled into poverty, including 200,000 children; working families make up the majority of families who will be affected by the cut; families with children will be disproportionately impacted; and the impact of the cut will be greatest across the north of England, Wales, the West Midlands and Northern Ireland.
It is ironic to note that, according to Citizens Advice, people are 1.5 times more likely to claim universal credit in places the Government have said they want to invest in, including those areas prioritised by their levelling-up fund. Indeed, it seems that this decision will take more money out of these local economies than it would put in, which is an extraordinary case of giving with one hand, but taking—in brackets more—with the other.
I am particularly concerned about the real-life impact: heart-rending decisions that individual households will need to take on whether to put food on the table, pay the rent or pay the bills—in short, going without essentials or being forced into debt to cover the costs. According to recent research from Toynbee Hall looking at the experiences of Londoners disproportionately affected by Covid, for many, income has reduced, expenditure has increased and debt has risen.
The Financial Inclusion Commission, of which I am a member, has argued that continuing the uplift is a key measure in avoiding the future financial and human costs of unpaid bills, evictions and debt recovery. For the most financially vulnerable households there is a real danger that people will have no option other than to turn to high-cost credit or illegal lenders to meet basic costs. The charity StepChange has highlighted how the termination of this uplift will be a cliff edge for millions, pushing them into deficit budgets. Can the Minister say what plans the Government have to ask all financial services providers and utilities suppliers, as part of their vulnerable customer activity, to signpost claimants to the freely available benefits and grants information and advice provided by a wide range of charities?
On the impact on mental health, many people with severe mental illness rely solely on benefits to survive, and the uplift has provided a much-needed lifeline to people who cannot work because of their condition. According to a recent Rethink Mental Illness survey, 76% of UC claimants said that over the last 12 months, concerns about money had impacted on their mental health “a lot” and over half said that they had experienced not having enough money to pay for food.
I want to ask the Minister, who I know thinks deeply and feels passionately about these issues, the following questions. First, all of the last six Work and Pensions Secretaries have described the uplift as a vital improvement in the adequacy of social security, joining hundreds of charities and other experts who have warned that this cut will cause real hardship, rising poverty and debt. Why are the Government ignoring this warning from such a wide array of voices and taking welfare support back to inadequate levels, particularly at a time when energy bills are set to rise?
Secondly, we keep hearing the Government’s plan for jobs as the justification for this cut. However, the majority of people who will be impacted by the cut are in fact already in work, and universal credit provides vital support for families moving back into work at precisely the same time as other pandemic-related government support schemes finish. How does this add up?
Thirdly, what are the Government’s plans for families on universal credit who are unable to work due to caring or disability? Surely, we believe these families should live above the poverty line and with dignity.
Finally, what assessment have the Government made of the interaction between the ending of the uplift and Tuesday’s announcement about the rise in national insurance to fund health and social care? Will there be any overlap between universal credit recipients and those earning enough to pay national insurance, in which case is this a double whammy?
I end by making a heartfelt plea to the Government, adding my voice to so many others, urging them to keep the £20 uplift, make it permanent and extend it to legacy benefits.
Baroness Eaton (Con)
My Lords, today’s debate is a very important one. The subject matter is understandably highly emotive and families, especially those with children, who are suffering poverty need our concern and our practical help. Unfortunately, universal credit has had naysayers from its inception. I feel it has been the unsung hero of the pandemic, with 3 million extra claimants rapidly joining the system. The old tax credit system would have let people down badly, and errors and delays would have led to massive hardship in the depths of lockdown. The book by the noble Lord, Lord Freud, said that paperwork got lost in 40% of tax credit claims.
It is clear to all of us that the days of the pandemic have been difficult for people, but they have also been difficult for government. Difficult decisions have had to be made. When the pandemic hit, the Government created a range of measures and it was always made clear that the uplift to universal credit was temporary. Can the Minister say whether the £6 billion cost of universal credit was modelled on a zero improvement in the labour market? Obviously, the economy is now revving up, so there are so many more job vacancies. Now the labour market circumstances have dramatically changed, there are more work opportunities.
The aim of and philosophy behind universal credit is to help people to escape the negativity of a life spent permanently on welfare. Attempts by previous Governments, such as tax credits, have trapped people in welfare. While the uplift is being removed, the Government are increasing the number of jobcentres and work coaches—factors to help people to find more, and better, jobs. The problem of in-work poverty is concerning. Can my noble friend the Minister inform the House about the in-work progression scheme, which, I understand, is aimed at helping with this situation?
The uplift is costing £6 billion. I believe that there can be, and must be, more and better ways for the Government to help people.
Children Living in Poverty
Baroness Tyler of Enfield Excerpts(1 year, 3 months ago)
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Department for Work and Pensions
Baroness Stedman-Scott
I assure the whole House that the Government take in-work poverty really seriously. Our plan is to build an economy that will support work, as we have said many times. Universal credit is designed to help people to move into work faster, although that can be challenging in the current circumstances. We have also set up the In-Work Progression Commission. As I have said before, people put forward ideas all the time and they are taken to the department. I assure the noble Baroness that we are taking this seriously. We might not be answering at the speed that she would like, but we are very genuine and sincere.
Baroness Tyler of Enfield (LD) [V]
My Lords, the Social Mobility Commission recently published figures suggesting that 72% of children in poverty were in families where at least one adult was in work—a figure that has increased steadily from 44% in 1996-97. It cited mounting evidence that benefit reforms were pushing children into poverty and concluded that the intention of universal credit was to lift more families out of poverty but the DWP appeared to have done little work to ensure that it was not making child poverty worse. What precise work has the department done to assess the impact of universal credit on child poverty, and will it publish its findings?
Baroness Stedman-Scott
I come back to what I said before: as a Government, we are always looking at the points that people raise and the issues related to in-work poverty. I think that the Social Metrics Commission said that poverty had been rising but had plateaued. Virtually all the increase in poverty occurred during 2001 to 2008; since then, it has plateaued. Going back to my response to a previous question, we are well aware of the situation of lone parents and are working hard and at pace to help them.
Unemployment: Support
Baroness Tyler of Enfield Excerpts(1 year, 4 months ago)
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Department for Work and Pensions
Baroness Stedman-Scott
The noble Baroness asks about converting advances into grants. I am sorry to say that the Government have no plans to do that. On the five-week period, no one has to wait five weeks for their money, but the five-week wait is an integral part of the design of universal credit. The Government are cognisant of the difficult situations that people find themselves in and are doing everything they can to support them in this difficult time.
Baroness Tyler of Enfield (LD)
My Lords, does the Minister agree that it is essential that government regulators and creditors work together to ensure that unemployed people who fall behind on essential bills and credit commitments are protected from falling into unsustainable debt by an immediate pause on all forms of collection and enforcement activity?
Baroness Stedman-Scott
I agree with the local Baroness that we must all work together to support those who are in debt. When it comes to suspending enforcement, there are very difficult questions and answers. I would like to go away and write to the noble Baroness after this Question on the specific point that she raises.