Universal Credit

Lord McKenzie of Luton Excerpts

Thursday 16th November 2017 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, it is a great pleasure to follow my noble friend Lord Cashman. Like everybody else who has spoken, I congratulate my noble friend Lady Hollis on securing this debate and on the typically forensic manner in which she introduced it. Like many people, I have supported the stated aims of universal credit—to simplify the benefit system and to strengthen incentives to work. There were hopes, too, that it would build on a social security safety net leading to lifting 350,000 children and 600,000 adults out of poverty. Its inheritance was that child poverty was at a 13-year low and there was cross-party support for further poverty reduction.

But we are a long way from all that today, and from the confidence of the coalition Government’s November 2010 White Paper. One of its paragraphs demonstrates the poor judgment involved in implementing such a major change, and why it has run into so many difficulties. Paragraph 12 of the executive summary states that universal credit,

“would involve an IT development of moderate scale, which the Department for Work and Pensions and its suppliers are confident of handling within budget and timescale”.

So much for confidence, with the programme having to be pushed back several times and a complete reset in 2013. But this has still not avoided the problems faced today, which is why we call for a pause in ramping up the full service rollout, so that some of its problems can be sorted out.

Many of the problems have been well aired this morning, and we have received a plethora of briefings for this debate, which are remarkably consistent. Some of the problems are design issues, some are problems with the administration of UC, and some are made worse by the fact that the changes are being implemented in a period of severe austerity. We heard some of the data from my noble friend Lord Livermore.

It is worth reflecting on the scale of this austerity. Let us remind ourselves that, as the CPAG analysis sets out, cuts to social security during the period of the coalition Government amounted to some £14.5 billion a year. The subsequent squeeze under the Conservative Government added further cuts of £13 billion. The OBR has confirmed that universal credit is now less generous than the tax credit and benefit system it replaces. Rather than reduce child poverty, the cuts will mean 1 million more children in poverty compared with the original design. The cuts will also reduce the rewards from work.

We will doubtless hear from the Minister that these cuts are countered by measures to boost family incomes, such as the increase in the personal allowance, the national living wage and childcare support. However, as the IFS points out, not only are these gains much smaller than the loss in benefits but they do not in general accrue to poorer households. Perhaps the Minister will confirm that.

On matters of design, much attention has rightly been focused on the monthly payment cycle and the initial six-week wait for payment. But there are other issues, perhaps not of such wide application, which have already been aired. Is the Minister aware of the difficulties arising from the late payment of final earnings, which can deny the initial period of a universal credit claim? Does she consider that the treatment of mixed-age couples who are denied pension credit is fair, and if so, why? What justification can she offer for the scrapping of the severe disability premium?

We know that the payment of housing costs through the housing element of universal credit is a significant problem, and the build-up of debt is hurting landlords and tenants alike. It is known that more landlords are joining those who are already reluctant to accommodate tenants on universal credit. The National Housing Federation includes in its representations concerns over mistakes being made by the system, and the lack of information, particularly when transitioning from legacy benefits. We have enough of a housing crisis, without adding to it by procedures which put tenants at risk of eviction and homelessness.

We should acknowledge that the Government have been generous with their time in holding briefings. But there is a total mismatch between what Ministers seem to hear and the furore raging in the country about how universal credit is being applied. It is to be hoped that today’s debate will reach those who currently have the power to change this.