Universal Credit (Transitional Provisions) Regulations 2014

Lord Kirkwood of Kirkhope Excerpts

Wednesday 18th June 2014 Lords Chamber

Moved by

[Lord Kirkwood of Kirkhope]

That this House takes note of the Universal Credit (Transitional Provisions) Regulations 2014.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is a pleasure to move this Motion. I should say that I have had notice from a number of colleagues about it. I know that there is concern in all parts of the House about the implications of universal credit and, because of the shortness of notice given for this debate—I was offered the opportunity for it to be this evening only 48 hours ago—many colleagues have indicated to me that they would have been here had they had more notice. In that regard, I am particularly pleased that the Minister himself has seen fit to come to answer the debate, which is typical of him and his well known interest in this important area of public policy. I hope that the debate will not stretch for too long but it is important to make the best use of the next few minutes, if we can.

I am of course founding this Take Note debate on the transitional provisions regulations and if I am founding it on any part of the documents at all, it is on paragraph 4.3 of the Explanatory Memorandum. As colleagues will know, paragraph 4.3 refers to “widening the availability” of universal credit and says that,

“as announced in Parliament on 5th December 2013, the introduction of the 2014 Regulations is part of the Department’s changing approach to how legislation relating to the rollout of UC is structured”.

I hope to be able to use that to describe some of the wider ramifications that sit alongside the content of these regulations.

I also start by referring to the always excellent work of the Secondary Legislation Scrutiny Committee. In paragraph 20 of its first report, it draws attention to the changes that the technical regulations bring and, in particular, expresses surprise that the regulations were,

“accompanied by the original cost/benefit analysis”,

of the impact assessment from 2012. That is a well founded question because things have changed so much over the past two years, so the department is not safe simply to rest its case on the impact assessment made all those months ago.

The other two points that the committee made which are salient to this evening’s discussion are, first, the fact that by now,

“Universal Credit has been made more flexible and can be ‘managed’ if problems arise in a particular area”,

and that those changes can now be “made by Commencement Orders”. Commencement orders are fine but they are not subject to parliamentary scrutiny, so I would be a bit nervous if such orders started to be used willy-nilly for claims being allowed in areas or to special cohorts of claimants without that scrutiny. Finally, the report says that the regulations,

“include provision to allow the Secretary of State discretion … to stop taking Universal Credit claims in … geographic areas”.

As the regulations suggest in paragraph 4.3 of the memorandum, that is a change to previous provision.

So the first part of my case is that on the surface these regulations are what we expected and contain no other surprises, since we always understood that the 2014 regulations would replace the 2013 regulations, and so far so good: I am perfectly comfortable about that. However, when you look at the position outside and the context in which these regulations are being introduced you discover huge and increasing uncertainty about the programme, which is no surprise to anybody who has been following the debate. Against the background of the regulations and the Secondary Legislation Scrutiny Committee’s report, I want to spend a little time on that mounting uncertainty this evening under four different headings.

First, on case load, I would have been surprised to be told in 2012, when the Minister took the primary legislation through in the Welfare Reform Act, that in 2014 the active case load would amount to 5,610 straightforward cases—I have the statistics here that were published on 11 June 2014. More than six in 10 of the 5,610 cases in that case load on 31 March 2014 were younger people under the age of 25. They are mainly single and are what is known in the trade as straightforward cases. They could not be more straightforward and it could not be a much smaller number. I remind the House that we are talking about a target case load by 2017 of 7.7 million households. At the current rate of progress, there are questions—I put it no higher than that—about how we get from where we are now to where we want to be in 2017.

I think that only three Jobcentre Plus areas are handling more than 1,000 cases each at the moment: Oldham, Wigan and Warrington. I know that the Government are rolling out the case load from time to time and there are, I think, up to 10 or more places where the new pathfinders are in operation. However, as far as it is conceivably possible, what I would like is a year-by-year estimate of the new rollout period in terms of case load because the transitional period that we are now facing in these regulations is much longer than I anticipated. Other people may have different ideas but if you had said to me in 2012, when the primary legislation was passed, that the transitional period would be as long as it looks it will be, I would have found that difficult to believe.

My second point is about how a longer transition period will impact on claimants. There is a very obvious case that the sooner people get access to the smoothing effects and the work incentive effects of universal credit, the better it will be for them. Day by day, for the people who do not have access to these provisions, making work pay and all the rest of it gets much harder. More acutely than that, in these regulations there is notification that employment and support allowance claimants, in particular, may be facing a delay even beyond 2017. I have read press reports about this. A report in the Guardian on 24 May suggested that 700,000 employment and support allowance cases could be affected. I understand why: it is because they have been transported off incapacity benefit. However, if we are really starting to talk now about 2018 to get this job done, we are in territory that begins to call into question the programme rollout as it stands. I have even seen knowledgeable IT experts make the case that this rollout may take anything between five and 15 years—from now. These are serious people who know about major projects.

We really have to look at some of the consequences of a longer transition period. For example, the local authority costs for continuing housing benefit administration would not have been anticipated and will not be in their plans. What steps are we taking to look out for that and make proper plans? Finally, on claimants, there is the local support services framework. At an earlier stage, the Government themselves said, rightly, that the LSSF is almost as important as universal credit itself. I agree with that, but if there is a much longer transition period, what is happening to finance that? The delays in the transitional phase are causing uncertainty in local authority and local support service framework circles.

My next point is about value for money. I note with interest that it is a while since the National Audit Office report was published. The Minister will know that my spies are everywhere. Actually, some of my spies may be double agents; I think that the department has found out whom I have been talking to and turned them against me, which, if true, is a dastardly act. I am being facetious, of course. However, I make the point that if there is a continuing NAO interest in this programme rollout, it may well be gearing itself up for a second investigation. If that is the case, I think it will indicate that the NAO is uncertain about the future of the project, and nothing could underline that more clearly.

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, I thank the noble Lord, Lord Kirkwood, for that speech and indeed for this opportunity to question the Government on the progress of universal credit. I do not think that he need worry too much about whether he strayed from the regulations. The points that he made were precisely the areas that I too had zoned in on from the regulations, so it is certainly my view that his questions are within the spirit, and clearly the content, of tonight’s business.

Before I turn to the content, I want to ask the Minister a process question. Could he explain to the House what the rush was for the consideration of this Motion? I saw these regulations appear on the green sheet certainly no more than two or three sitting days ago, and it was only yesterday that it was confirmed that this debate would take place tonight. There may have been other noble Lords with an interest in this subject—there were certainly plenty of us during the passage of the Welfare Reform Act—who wanted to participate in the debate.

[Lord Kirkwood of Kirkhope]

I have to leap to the defence of the Minister. This is my fault: I tabled the debate and was offered a slot, and the Government were very generous in giving me a slot on the Floor so I took it early. That is entirely my fault and was nothing to do with the Government or the Chief Whip.

[Baroness Sherlock]

I thank the noble Lord for that intervention and for leaping to defend the honour of the Minister. The only point that I make is that it may not be widely understood outside the House that no one consults, for example, the Opposition to see whether a spokesperson is available. This gave me 24 hours to get these regulations out, read them and understand what they were about in order to be able to hold the Minister to account. The process should allow for that. I was not suggesting any conspiracy on the Minister’s part—I know that these matters are far above his pay grade and mine by some considerable distance—but I simply place that point on the record. I think that we would get better debates if we all had a bit more notice when things of this complexity were coming forward. It is not as though universal credit is in a rush. It is not about to be rolled out across the country next week or next month.

The noble Lord, Lord Kirkwood, raised the question of the speed of transition. I think he was rather generous to the Secretary of State. On 1 November 2011 Iain Duncan Smith promised that 1 million people would be claiming universal credit by April 2014. So how does it look now? The noble Lord pointed out that the case load now, far from being 1 million, is 5,610, and the signs are not promising. In January this year, 1,010 people started claiming universal credit, in February it was 630 people and in March it was 560 people. Only 6,550 people have claimed anything at all since the scheme began. That is an enormous difference.

The Secretary of State has insisted repeatedly that universal credit would meet its deadlines of first national rollout from October 2013 and final replacement of housing benefit, child and working tax credits, income support and non-contributory JSA and ESA by 2017. I am with the noble Lord, Lord Kirkwood, on this; I would not bet the DWP pension pot on that deadline being met at the moment.

The noble Lord asked a question about what “reset” means. He is right not to believe everything he reads in the papers, but the papers were pretty much of the same view that the reason the project had to be reset was that it had previously had an amber/red rating from the Major Projects Authority and was probably about to get a red rating, so in order not to get a red rating it was reset so that it did not get any rating at all. I very much hope that that is scurrilous suspicion on the part of the media and that the Minister can correct it and explain the process to us.

However, it is not the first time. Whenever criticisms are made of the project, the department comes back and Ministers say that those criticisms are not fair because they do not take account of changes that have recently been made. There comes a stage when, if problems keep arising and changes are made, it is legitimate to say: how can you persuade people outside, never mind the House, that the department has learnt enough from previous mistakes to have any confidence in the next level of management development that has been put forward? I hope the Minister will be able to give us some reassurance on that front.

Recently, there have been even more worrying reports about problems in the pilot universal credit areas with claims that administrative errors and computer glitches had led to increases in personal debt, rent arrears and evictions.

The noble Lord, Lord Kirkwood, raised the question of value for money. In four years, more than £600 million has been spent and, as he pointed out, the Government admit that £40 million has been totally wasted and a further £90 million “written down” because the IT bought was not fit for purpose. That is a lot of money for 5,610 people to be claiming universal credit. That context means that the Minister will understand why there is nervousness about the fact that these regulations seem to give the Government considerable discretion in deciding how the rollout should take place in future.

First, as the noble Lord pointed out, unlike the 2013 transitional regulations, these regulations give that discretion to the Government. They no longer contain proposals for categories of people to be brought on to universal credit. Rather, “gateway conditions” for universal credit claimants will in future be spelt out in commencement orders which, as the Joint Committee on Statutory Instruments points out, are not subject to parliamentary scrutiny. Secondly, the regulations permit the Secretary of State to stop taking universal credit claims altogether either for certain categories of people or in certain parts of the country. That is a really significant shift in powers from Parliament scrutinising or passing regulations to the Secretary of State. Will the Minister give us some indication of whether there is any limitation to those powers? Could he, for example, decide not to include several benefits? Could he decide not to do Wales? Could he decide not to do the north of England? Is there any limitation to that discretion? If so, what does that mean for our understanding of what the transition timetable will be, a point pressed very effectively by the noble Lord, Lord Kirkwood?

The questions I would like to ask the Minister are these. First, why are these changes necessary? What was wrong with things that were done previously when regulation was used? What is necessary? What is it about the process and, more importantly, what do the Government think the process is going to look like in future that means they need these powers?

Secondly, how will Parliament be enabled to scrutinise the decisions taken by the Secretary of State to control who is entitled to universal credit? The noble Lord, Lord Kirkwood, flagged up one of the points made in defence of universal credit, which is that it will give various benefits to categories of claimant. If that is the case—certainly the Government have used that defence in explaining why they had to cut existing benefits—that is a considerable power. How can Parliament hold Ministers to account for deciding who is and is not entitled to access a system created by Parliament with an expectation that it would by now have been experienced by 1 million people and would be entirely rolled out by 2017? That is a very serious constitutional question.