Universal Credit

Debate between Lord Young of Cookham and Baroness Hollis of Heigham

Thursday 16th November 2017 Lords Chamber

[Baroness Hollis of Heigham (Lab)]

My Lords, I am sure that we all want—wanted—universal credit to succeed, so in opening this debate I first pay tribute to the noble Lord, Lord Freud, who has heroically sought to build UC. It has been badly battered by HMT, but his architecture is still there. Secondly, I thank our Lords Minister, the noble Baroness, Lady Buscombe, who has been so helpful and approachable. It is a pleasure to work with her.

With so much early good will, why is UC in so much trouble, its effects on so many claimants catastrophic? People newly claiming UC from today on will not get their first payment until after Christmas. How will they cope? The story of UC is now a story of broken promises. During the Second Reading debates of 2011, Mr Duncan Smith and the noble Lord, Lord Freud, in good faith made three core promises to us all.

On 9 March 2011, Mr Duncan Smith said,

“work will always and must always be made to pay”.—[Official Report, Commons, 9/3/11; col. 921.]

The second promise, by the noble Lord, Lord Freud, was made on 13 September 2011, when he claimed that UC would lift,

“600,000 adults and 350,000 children out of poverty”.—[Official Report, 13/9/11; col. 629.]

Thirdly, Mr Duncan Smith said that UC would be,

“a regime that is easy to understand”.—[Official Report, Commons, 9/3/11; col. 923.]

The noble Lord, Lord Freud, said that a single UC benefit would be simple to claim and access.

Three promises: work would always pay; families would be lifted out of poverty; and a single benefit would ensure a simple structure. UC would, we hoped, be transformational. Three core promises, and every one broken. Why? HMT’s cuts and, to some extent, DWP delivery. The DWP fought Treasury cuts and lost. Now that UC is far meaner in its payments, nastier in its sanctions and harsher in its delivery than tax credits, HMT is suddenly anxious to roll it out ever faster—10 times faster, laying waste to DWP promises and our fellow citizens’ lives.

My examples come mainly from the deeply distressing 650 pages or so of last month’s written evidence to the Work and Pensions Select Committee. One claimant wrote that UC can transform lives,

“that is certainly true, by catapulting the ‘only just managing’ into poverty and debt”.

That is in UCR 0019.

Broken promises: let me count the ways. Promise one was that work would always pay. No. The IFS says that 3 million working families will, on average, be £2,500 a year worse off. The work allowance, which is taper free, before UC withdrawal kicks in, has been cut by up to £2,000 for a lone parent, and for single people, scrapped. A lone parent with one child now has to work 25 hours a week on UC to get the same income as working 16 hours a week under tax credits—60% more hours for the same income. Would we?

Second earners, mostly partnered women, are even worse hit, with no work allowance, so 63p in the pound taper from the first pound, tax and NI, childcare and loss of council tax support can take some 93% of her earnings. Why work when, with travel costs, you can be worse off? Would we?

The self-employed are especially exposed, as are disabled families. One client told the charity, Turn2us, “I will be better off giving up work because with the new UC I will be £200 worse off … so contemplating unemployment in 2018”. That first promise that work always pays is not for him, nor in future, when UC reaches 7 million people, for many thousands of others, so the DWP uses the whip of unbelievably harsh sanctions to get people into work that for too many does not pay. The first core promise is therefore broken. The second core promise was that UC would lift 350,000 children out of poverty. Instead, says CPAG, drawing on DWP and IFS stats a fortnight ago, HMT’s repeated cuts to UC will send 1 million more children into poverty by 2021, their lives blighted. How in all decency can we defend this even to ourselves? Promise number two is therefore broken.

I come to the third broken promise on smooth delivery. Where to begin? There are missed payments, delayed payments, wrong payments, cases lost or closed, making late appeals impossible, staff unable to handle contributory benefits, claimants lacking acceptable ID, reputable advisers such as CAB unable to act for clients in hospital because they lack explicit consent, staff asking for the wrong information, documents getting lost, keeping incomplete records and giving conflicting advice. Claimants have informed the DWP that they could not attend an appointment as their employer refused them time off. They were sanctioned. They were in hospital: sanctioned. An appointment posted by the DWP to the wrong address: a three-month sanction.

Take IT. Parts of rural Norfolk lack internet access; in any case struggling claimants, especially older or disabled people, cannot afford dial up or smart phones, nor can they always get to jobcentres, 87 of which, unbelievably, are closing just at the time when we should be boosting jobcentre support. What can they do? A claimant had an appointment for 10 am. He notified the DWP that his first local bus arrived at noon: he was sanctioned. One man—reference: UCR 0065—with a traumatic brain injury affecting his memory, was late for his appointment. He was sanctioned and lost several hundred pounds. He self-harmed, and, unable to afford the bus fare to hospital, he closed his wound himself with super glue.

Tribunal judges are scathing. The greatest problem, however, is the six-week or more waiting period, and then monthly payments in arrears—supposed, if I may say so, to moralise some of the most marginal in society into behaving like middle-class salaried professionals resilient with savings. The Government must know the stats: 58% of those on UC are paid weekly or fortnightly, not monthly. Plymouth Community Homes has 14,000 tenants; 75% of its claimants are paid weekly, fortnightly, or have limited hours, so payment delays sink those claimants deeper into the quagmire of debt. In Gateshead, 221 of 231 tenants on UC have arrears over £800; in Halton, 920 of its 1,000 tenants have these arrears. Croydon, Southwark and Tower Hamlets have an average debt for all UC payments of about £1,000. Many, I fear, will never get out of the debt we have constructed for them. Family members, themselves struggling, are trying to support other family members. As one sister said, it is “the poor that are supporting the poorest”.

More than a quarter of claimants are waiting more than six weeks for their initial payment; one in 10 is waiting for more than 10 weeks—without earnings, benefits, or savings. They are pawning their belongings and missing meals. Charity workers are finding fivers out of their own pockets to put the meter back on for some lighting and heating. All these people are facing Christmas.

Half of new UC claimants now claim advance payments, which is surely evidence that the six-week model was flawed from its very beginning. But, unlike the low cap in tax credits debt recovery, for the next six months DWP takes up to 40%—often far more with other debts—from your UC standard allowance for advance payments, council tax and utilities arrears. Each month, your personal, private debt rises to cover the shortfall from your public debt, as handled by DWP.

The second largest delivery issue is that UC is not paid directly to landlords on request. Some 79% of UC claimants are in rent arrears. Some have already been evicted by social landlords. In Northern Ireland and Scotland, at tenants’ request, UC can be paid fortnightly rather than monthly in arrears and the housing element paid directly to the landlord. If it can be done in Scotland and in Northern Ireland, why not in England?

DWP is extending its trusted partner and landlord portal scheme, but not to the private sector. Private landlords need their rents to finance their mortgages. Some tenants are waiting for 10 or 12 weeks—yet eight weeks of arrears are mandatory grounds for re-possession.

So what changes might, in my view, help to rescue UC? What might begin to redeem those broken promises: that work should always pay; that people would be lifted out of poverty; and that delivery would be simple? Of course, I would like a reinstatement of the cuts, from benefit freeze to second child policy—those are big ticket items. But, in particular, we hope to see a four-week rather than a six-week initial payment period in the Budget.

We want, at tenants’ request, fortnightly payments of UC and direct payments of the housing elements to landlords, as in Scotland and Northern Ireland. We should cap and slow down DWP debt recovery to avoid even deeper debt.

We should raise the work allowance; pilot some second earners to see whether their own work allowance would bring them into work. Two-thirds of children in poverty have a working parent. If work really paid, a second earner could lift her children out of poverty—and that must matter, I am sure, to us all.

Here is a proposal from someone who knows how UC works. Most UC problems hit and hurt claimants within the first three or four months. A fortnight’s UC grant at the beginning of a UC claim—with no clawback, just a fortnight’s grant until first full payment as now—would keep so many families afloat.

This would be a grant that does not need be repaid. But how much would it be? By 2021, it is calculated, total social security cuts and welfare reforms will be “saving” HMT £37 billion per year—86% of that falling on women, of course. A two-week grant, costing between £400 million to £600 million, combined with four weeks until first payment, could indeed transform lives for the better. It could be a grant financed, perhaps, by last year’s £680 million underspend on tax credits, as pointed out by the OBR. People are so scared out there. The work and pensions evidence that I have here is completely draining in its wretchedness.

Two people are facing Christmas. Donna—UCR 0060—is a lone parent with three children, who has been working zero-hour contracts, on UC, for 18 months. When her hours were cut as a ZHC worker, as little work was available, she tried to get an advance payment but was told—correctly, according to the rules—that it was too late. It was her fault, they said—she should have budgeted better. She says, “I wanted to say, ‘You don’t know my situation. I work, I work, 40 hours a week if I can get it. You don’t know how hard this has been. I’m a person!’”.

Steve, a 55 year-old maintenance engineer, was made redundant in April 2016. After four visits and three months, he got his first payment. The stress and fear led to angina and he was hospitalised, so he missed an interview and was sanctioned for two months. The resulting rent arrears of £1,000 meant that he lost his home. He did everything right. We did everything wrong. We broke our promises—and we broke him with it. What Christmas is there for Donna or Steve? We can and must do better than this. Sir John Major said last month that UC was,

“operationally messy, socially unfair and unforgiving”.

Was he wrong? I beg to move.

[Lord Young of Cookham (Con)]

My Lords, this debate is very well subscribed and is taking place within a tight timetable. I urge all noble Lords to stick within the five-minute limit.

Government-commissioned Research

Debate between Lord Young of Cookham and Baroness Hollis of Heigham

Wednesday 28th June 2017 Lords Chamber

[Lord Young of Cookham]

I am sure there is room for progress, but I note that the UK is a world leader on open data and, in 2016, for the third year running, ranked first in the world on the World Wide Web Foundation’s Open Data Barometer.

[Baroness Hollis of Heigham (Lab)]

My Lords, we all know of circumstances in which government research has been published after the relevant debate in this House. We all know that government research has been published in the long vacations or vacations where there is no access to it or ability to scrutinise it or interrogate Ministers about it. In other words, delay is effectively suppression in too many fields. Will the Minister please take seriously the very real and pertinent points made by the noble Baroness, Lady O’Neill, in order to help the House of Lords in its primary function, which is scrutiny?

[Lord Young of Cookham]

I certainly agree that research should be released as soon as possible and it would be wrong to suppress it for political reasons. As I said a moment ago, Sir Stephen said he found no indication that research had been indefinitely suppressed. However, he went on to say that delay could be damaging or unfortunate. The protocol that I referred to gives advice to departments on the timing of the publication of research. I will do what I can to make sure that is adhered to.