Universal Credit

Lord Farmer Excerpts

Thursday 16th November 2017 Lords Chamber

[Lord Farmer (Con)]

My Lords, I am grateful to the noble Baroness, Lady Hollis, for giving us the opportunity to discuss this issue, which affects so many lives, both directly and indirectly, in terms of the confidence the general public has in our welfare system. It is vital to stand back and assess what universal credit—UC—is trying to achieve.

If we had not, with our coalition partners, invented and implemented UC, the ineffectiveness of the legacy welfare system would have been a running sore in political debate that would have become a dangerous fault line as we approach Brexit. It would have been far too late to make any meaningful reform, but there would have been urgent calls for it, given the acute labour shortages we would be facing as the number of migrant workers willing to do jobs left vacant by British workers reduced.

Related to this, and before Brexit became an issue, the high unemployment rates that welfare reform has helped us to avoid would have undermined the whole of society. Human dignity is deeply affected by lack of work. For example, while it is a complex picture, Understanding Society data suggests that longer-term unemployment is associated with obesity. This badly affects confidence and employability and thereby further traps someone in a pernicious cycle of poor health and unpromising life chances.

Writing about the legacy benefit system, one of our foremost experts, Nick Timmins, said,

“Like many others, I had come by the mid-to-late 2000s to recognise that it had become horrendously complicated—both in the way it handled the absence of work and in the support it offered once people were in low-paid jobs”.


He notes its incomprehensibility to claimants and administration staff alike, the billions of pounds-worth of unintended error every year, and how it “almost actively encouraged fraud”. Substantial reform was particularly important because moving into low-paid work for those out of it for any length of time felt very risky. It could take weeks to sort out a fresh claim for benefit if the job failed, hence unemployment existing alongside high vacancy rates. He and Professor Roy Sainsbury, an early proponent of a “single working-age benefit”, saw UC as,

“essentially a technocratic change … an apolitical idea that was not rooted in any ideology at all”.

Thus, my concern is that UC has become unhelpfully politicised—a stick with which to beat the Government regardless of the broad sweep of positive outcomes, and the subject of inaccurate and shameful scaremongering.

For example, during Prime Minister’s Question Time in the other place on 11 October, the Leader of the Opposition claimed that Gloucester City Homes had evicted “one in eight” of their tenants—650 in total—due to UC. However, in actuality eight people, all of whom had significant debt arrears before UC was introduced, were evicted. Richard Graham, Conservative MP for Gloucester, flagged up as a point of order that,

“the picture painted by the Leader of the Opposition yesterday was a long way from the true situation”.—[Official Report, Commons, 12/10/17; col. 497.]

The impression has also been given that there will be a big bang in UC rollout just before Christmas, when most families already feel nervous about their finances. However, the pace of the test, learn and rectify process is staying steady and the proportion of the forecast claimant population receiving UC will reach 10% by the end of January, as preannounced. On the subject of test and learn, can the Minister inform the House what progress has been made in developing universal support, which will help people with debt and other disadvantages as they become used to the new system?

Finally, there will be a projected £70 billion in savings to the public purse as a result of the shift away from the legacy benefit system, not because of parsimony, but because of people moving into work. Have the Government modelled if and how savings might be improved by lowering taper rates still further than the recent drop from 65% to 63%, albeit at an up-front cost of £1 billion over five years? There would be a similar cost in reducing the taper rates from 63% to 60%. But what would be the likely return to the Exchequer, given that lower taper rates—and of course improved work allowances—increase work incentives?