Universal Credit

Baroness Warwick of Undercliffe Excerpts

Thursday 16th November 2017 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, this is an extraordinarily timely debate in terms of the rollout of universal credit and I congratulate my noble friend Lady Hollis on securing it. Her powerful opening speech was a catalogue of good policies eroded by Treasury pressure, now creating misery for thousands.

I declare an interest as chair of the National Housing Federation representing housing associations. Many thousands of their tenants are eligible for universal credit. I have seen at first hand the awful impact on families and individuals of both the six-week wait and the poor administration of the scheme. The federation I chair has worked with the department to design a portal that enables landlords to see the status of tenants in the system and avoid moving to eviction.

I want to focus on some of the immediate problems that housing associations have encountered. It is clear that the six-week waiting time for the first payment is not working. It is causing unnecessary hardship for low-income families who struggle to make ends meet while waiting for their very first payment. I know that the Government have increased the availability of advance payments, but these are loans that must be paid back. This leaves people with already very limited funds with another financial burden to manage while they try to keep a roof over their head and put food on the table.

The six-week wait is not fundamental to the operation of universal credit. It has been built into the system by government and—yes—by pressure from the Treasury. Reducing this period to two weeks or to a very maximum of four weeks would save even more people from falling into unnecessary financial hardship and building up rent arrears. Will the Minister acknowledge the evidence and deal with this as a matter of urgency?

Then there is the way universal credit is being paid. Claimants are paid on a monthly basis in arrears. The Government argue that this is designed to mirror the world of work, smoothing the transition into paid employment. The Resolution Foundation found that this was not realistic for many of those eligible for universal credit. Many other noble Lords have mentioned this, but 58% of new claimants moving on to universal credit after leaving a job were not paid monthly. They relied on weekly or fortnightly pay cheques. So the move means more juggling of costs, or borrowing money while they wait for their UC to arrive. We should have learned; the same problems arose when weekly cash payments were changed to monthly bank payments. The response then was phasing and it worked. Will the Minister consider that option before UC is rolled out any further?

I have one final point. As many noble Lords have highlighted, universal credit is a huge change for everyone involved. It should be no surprise that many people need help navigating and managing it. All sorts of problems need to be sorted out. But the department has not allowed implicit consent for sharing information with third parties in UC full service areas—except for MPs. This is a different system from live service and has hamstrung housing associations and agencies such as Citizens Advice as they try to help people manage their claims and sustain their tenancies.

In full service, housing associations now have to seek explicit consent from tenants to allow the Department for Work and Pensions to share more detailed information about a claim. This consent can last for the period of the assessment, or sometimes staff are asked to provide consent each time they contact the DWP on the tenant’s behalf. This is just not practical, especially in rural areas where support is often provided remotely. It leads to unnecessary delays in sorting out problems and, in the worst circumstances, can result in associations and tenants incurring legal costs because a problem with a claim cannot be sorted out in time. I urge the Minister to resolve this issue as soon as possible. I urge her to look again now at waiting times, payment cycle and the rules around consent.

There was widespread support for the principle and aims of universal credit. Speakers today on all sides of the House have shown that we do not yet have a system that meets those aims. As the rollout of universal credit speeds up, affecting more and more people, these issues will pose real challenges to the very people universal credit was set up to help. This is one of the biggest welfare changes in a generation. I do not believe that the Government want their legacy to be thousands of families pushed further into debt and hardship.