Universal Credit and Welfare Reform

Andrew Gwynne Excerpts

Tuesday 11th September 2012 Commons Chamber

[Andrew Gwynne (Denton and Reddish) (Lab)]

It is a pleasure to contribute to this important debate. The notion of making work pay should be supported by everyone in the House, but there are worrying signs in the Government’s proposals and unless they heed them, I fear that they will fail in their ambitions.

One of the two local authorities that cover my constituency—Tameside metropolitan borough council—has been selected, along with Oldham and Wigan councils, to be in the Greater Manchester pathfinder area. The Secretary of State mentioned the pathfinder areas in his speech. We are told that the aim of the pathfinders is to build confidence in the components of universal credit and to learn lessons for the larger-scale implementation of the scheme later in the year. Tameside council tells me that it agreed to take part in the scheme so that it could highlight any glitches in the new system that a borough like that might encounter, before the system was rolled out nationwide, so that the Government would be able to iron them out in good time.

I want to turn briefly to some of the specific concerns. There is general consensus on the ethos that work should pay, but there are real worries that such dramatic changes could disadvantage families and that, instead, work—or at least low-paid work—would not pay. On the proposal for monthly payments, the Minister will know that, at present, a significant amount of housing benefit is paid directly to landlords, and in particular to registered social landlords. The Department for Work and Pensions has announced eight local authority demonstrator pilots, and payments direct to tenants in social housing have been accelerated in those pilot areas from June this year. However, none of the pilots is in Greater Manchester. I do not know why; Oldham and Wigan were certainly long-listed. The Government should have a spread of pilots, in order to ascertain the impact that the changes could have in different types of communities. That is the first worry.

Secondly, as we have heard, universal credit is to be paid one month in advance, to mirror a monthly salary if the claimant gains employment. This is a real concern for private landlords and registered social landlords, not least because they expect rent arrears to increase. People might need more budgeting advice and assistance than is currently available. What assurances can the Minister give to me, to landlords and to my council that arrears will not increase in that way? What joined-up thinking has taken place between the DWP and the Department for Communities and Local Government to ensure that it does not happen? Ministers must also understand that residents, especially those under real pressure, will be seeking support from local advisory services, such as Citizens Advice and Welfare Rights, at a time when those services are being reduced as a result of spending cuts. That, too, is a real worry.

A further worry has arisen over the introduction of online application forms. We have already heard that between 5% and 10% of residents will require additional support with such applications. That is particularly worrying in an area such as mine, where there is a digital divide. A significant proportion of the community that I represent cannot easily access the internet and would need extra support to make a claim. Furthermore, this change comes at a time when publicly accessible community IT facilities are being removed as a result of Government cuts.

My final worry relates to the combined impact of other welfare changes, particularly when a transfer of responsibility to local authorities is involved. Local council tax support schemes are an example of that. Indeed, Tameside council tells me that there is still no information from the DWP about how the so-called localisation of council tax benefit will be co-ordinated with the introduction of universal credit, particularly in relation to the sharing of data. It is potentially the same residents who will be targeted by the reductions arising from the changes to housing benefit, to council tax benefit and to the under-occupancy rules. It worries me that those same people are facing a squeeze on their tax credits.

That brings me neatly to where I started. Unless the Government get a real grip on these issues, the new system will fail, particularly in constituencies such as Denton and Reddish where, sadly, the damage could be lasting.