Universal Credit

Lord Morris of Handsworth Excerpts

Thursday 16th November 2017 Lords Chamber

[Lord Morris of Handsworth (Lab)]

My Lords, on the face of it, universal credit seems a good idea. We were told that it would simplify the system; it would make work pay and, as a result, recipients would enjoy higher living standards. Why is it then that an astonishing mass of experts have provided evidence that has led them to urge a temporary halt to the rollout of the system until it can be more effectively and efficiently put in place?

Why, we may ask, was it necessary for the Joseph Rowntree trust to point out that the majority of people experiencing poverty already live in working households? In 2013, claimants in Warrington were among the first to experience universal credit. Their biggest social landlord quickly found that the haphazard payments system did not fall in with its accounting procedures and processes—92% of its tenants using the new system went into rent arrears.

Some problems—such as the six-week wait for benefit—were known about four years ago. The majority of in-work claimants get paid weekly and those on zero-hours contracts and in other forms of the gig economy have no certainty over when they will be paid. Not surprisingly, few have money in the bank to finance delays. We are entitled to ask, was it the Government, a Minister, or the DWP who thought claimants could wait six weeks or longer before receiving any money? Did they think unfriendly landlords would wait six weeks for their rent?

Who would doubt that the six-week wait was incorporated purely as a saving device? It is known that, from the outset, universal credit has been dogged with problems—processing errors, computers malfunctioning and poor management. The Guardian reported irregular payments to claimants, claims being closed without explanation, difficulties in contacting benefit officials, and lengthy waits for errors to be corrected. The CAB found that local jobcentres had no reliable access to the system to sort out problems. Local authority staff brought in to help were unable to reach anyone with responsibility for universal credit, or who had the will or, indeed, the authority to investigate.

Do the Government really think a rollout to the whole country will improve the system, which is unable to cope with existing numbers? It will be like trying to run a marathon backwards. A variety of individuals and organisations predicted, and indeed warned, that the rollout would result in chaos. To date, the evidence shows that what we have is not just chaos but, for many people, social disaster.

The Peabody Trust estimates that the mandatory six-week wait for a first payment will put more than 23,000 low-income families at risk of destitution. The Trussell Trust predicts that in the run-up to Christmas, when the number of food banks in areas of full universal credit will triple, there will be a massive increase in demand for its services. Already, it has seen a 30% average increase in use among universal credit claimants. New analysis by the Child Poverty Action Group and the Institute for Public Policy Research predicts that the cuts to benefits under universal credit will put 1 million children into poverty, while the Institute for Fiscal Studies states that the number of children living in poverty will soar to a record 5.2 million over the next five years—and so the problem increases. Organisation after organisation questions the sense of expanding the system. Shelter warns of a massive increase in homelessness. Last month, Frank Field MP, chair of the House of Commons Work and Pensions Committee, accused the Government of withholding bad news. I do not question their motives—if I had such a bad story to tell, I would keep it to myself.

With the crisis getting worse by the day, common sense demands a pause to sort out the administration and the structural problems of universal credit, otherwise the cost to the next generation will be extreme poverty and futures lost forever. In summary, the verdict across the country on this policy is simple: good intention, poor execution.