Anne Begg
Main Page: Anne Begg (Labour - Aberdeen South)Department Debates - View all Anne Begg's debates with the Department for Work and Pensions
(11 years, 8 months ago)
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Dame Anne Begg (Aberdeen South) (Lab)
On 22 November last year I was privileged to launch in the Chamber a Work and Pensions Committee report entitled “Universal Credit implementation: meeting the needs of vulnerable claimants”. That day I was the only one officially allowed to speak. As a result there are a number of hon. Members who are—I was going to say frustrated—itching to speak. I hope they will have the opportunity to do so now.
That day showed that there was huge interest in various aspects of universal credit and its implementation, so it is excellent that we have the chance to have this debate today, especially as the Government have now published their response to that report and we can look in more detail at the issues raised by the Select Committee. I expect hon. Members will also raise their own issues that we did not examine. It is a good time to revisit the findings of our report to see whether, three and a half months on, the Government have made progress in addressing some of our concerns. This has become more urgent because the first claimants in the pathfinder areas will begin to be assessed for universal credit in just over a month, and the roll-out for new claimants begins in October this year.
Universal credit is the Government’s flagship welfare reform. Everyone of working age who claims one or more of the many income-related benefits will, over the next four years, be moved on to universal credit. Some 8.3 million households will be affected once it is fully rolled out. Not all of them will be on the new universal credit, but they will be affected in some way, so if universal credit does not work in the way that it is designed to do or if the IT fails to deliver, it has the potential to cause a great deal of stress and anxiety in families who depend on the state for some or all of their income.
The size of the Government’s ambition in introducing universal credit became clear to the Select Committee as we began to receive evidence. Such a large-scale reform of the benefits system has so many aspects to it that we realised we would not be able to cover all the provisions in detail. We did not have time to explore fully all the incentives and disincentives to see which families would be better off and which would be worse off, who would lose money and who would manage to survive. Other questions were raised with us that we did not deal with in as much detail. Would families with high child care costs be better or worse off, for instance?
We did not have time to interrogate properly how robust the Government’s often repeated assertion is that under universal credit all people would be better off in work than not in work under all circumstances. Some doubt has been cast on whether that will be true. We know that under the system there will be notional losers, although the Government have promised that there will be some cash protection. We were aware, for instance, that second earners in the family may not mean that the family is better off under universal credit. We were aware also that families with particularly high child care costs might not be better off once those are factored in.
The reason it is often very difficult to reform a complex welfare system, of the kind we have in this country, is that there can often be unintended consequences, and I am sure UC will be no different. I am fairly sure that Ministers will admit that that is bound to be the case. Even if everything goes incredibly well, there will be unintended consequences. The real test for the Government will be how adept and quick the Department for Work and Pensions is in dealing with the inevitable blips; how it irons out the kinks, how it ensures that families do not face difficulties while it sorts out any problems and how quickly it responds when the inevitable difficulties arise.
It would have been impossible for the Committee to give detailed consideration to every aspect of universal credit, so we decided to concentrate on its implications for vulnerable claimants, which explains the report’s title. Not all benefit claimants are vulnerable; far from it. It is worth remembering that most people of working age who receive benefits are in work and are not dependent on the benefits system for all their income. However, it is probably true to say that all vulnerable people are benefit claimants. It is therefore imperative that the Department takes account of that and does not design a system that can be accessed only by people who can manage their lives fairly well. It must also be easy to navigate for someone who finds life a struggle. I mean someone who struggles to pay their bills, struggles to follow basic written instructions, struggles with poor health, struggles to use public transport, struggles to heat their home or struggles to put a nutritious meal on the table—someone who just struggles with daily living. Those are the people who face a complete overhaul of the benefits they receive. It was to those who might find the introduction of universal credit a real challenge that the Committee paid most attention.
The biggest barrier a vulnerable claimant might face is making a claim in the first place, because the Government are determined that universal credit will be an online benefit—“digital by default” is the phrase they use. The application will be made online, any change in circumstances or other information will have to be reported online, as will any change of earnings, but the sting in the tail is that the information might come from Her Majesty’s Revenue and Customs, so obviously the information has to get from HMRC to the DWP computers.
The most important aspect of universal credit’s delivery will be the IT. If it goes wrong, the whole system will grind to a halt. However, a digital system, in order to work, requires users—in this case the claimants—to have access to, and be able to use, the internet. There is still great concern that the people who need to apply for universal credit will not have access to the internet, or indeed to a computer, in order to make the claim in the first place and that, for those who are not computer literate, there might not be sufficient help for them in the right place.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
The hon. Lady makes an important point about accessibility. Does she share my concern that 36% of low-income households in Scotland do not have internet access at home?
Dame Anne Begg
The figures the Committee received vary greatly. We were told that as many as 80% of claimants might struggle with some of the IT and that as few as 20% would not have internet access. Although some people might be able to use Facebook and other social media sites, that is quite different from making a claim that, by its nature, has to include very personal information. Many people who do not have a computer at home might not be able to use computers in the public domain, such as those in internet cafes, because of security issues. There are many questions about access to computers and IT.
Hywel Williams (Arfon) (PC)
Does the hon. Lady share my concern about the difficulties that people in extremely rural areas might experience, because their rural deprivation will be compounded by the introduction of the IT system?
Dame Anne Begg
Perhaps the Minister would like to answer on that point. The Government said in their response to the Committee’s report that there will be a telephony system, which is good to know, although I understand that there will be no paper application form, so no one can phone up to request one. They expect about 45% of initial claimants to use that system to complete their claim. However, the person at the other end of the line will be using the same interface that online claimants see, so it will have to be designed in a way that works and is easy to understand. Access to a computer is one thing, but the customer-facing interface must also be easy to understand.
Ms Margaret Ritchie (South Down) (SDLP)
Does my hon. Friend agree that there is a particular concern for those in rural communities who might not have the necessary access to broadband and therefore do not have internet access, which will place them at an extreme disadvantage?
Dame Anne Begg
That is a problem in rural areas, but some urban areas, such as Glasgow, do not have superfast broadband either. Around 50% of claimants will be claiming at home on the internet, so that is really important.
Jane Ellison (Battersea) (Con)
The Committee, of which I am a member, identified those real concerns, but does the hon. Lady not agree that there are also opportunities? In my constituency, where English is a second language for many, digital by default offers the opportunity for translation and other services that will in many ways make a digital interface easier to use than a paper form.
Dame Anne Begg
The Government’s whole point in doing this is to make the system easier, so hopefully it will be. If it is not easier at the end of the process, we really will have got everything wrong. In the process of introducing this fully, the Government will obviously have to address some of the concerns that hon. Members have raised.
The Government’s response indicates that they expect only 50% to claim online and about 5% to get face-to-face interviews, which means 45% will claim through the telephony system. Perhaps the Minister can explain the wording in the Government’s response. It states:
“Our target is that 50% of claims which can be made online will be made online in October 2013 when Universal Credit is launched nationally.”
I am not sure that I understand that sentence. Does it mean 50% of the total number of people who will make a claim, or 50% of those who can make it online, which will not be everybody. I am not exactly sure what proportion the Government are talking about.
The Government’s response mentions face-to-face interviews, which is good, but they are still for only 5% of cases, and they give not a hint about where the interviews might take place and what proportion of them are likely to be home visits. After all, a large number of people in the universal credit cohort will have severe disabilities. They might receive other benefits that they have claimed previously, but they will also be in the universal credit cohort.
I am also glad to see that jobcentres are to have IADs—internet access devices—which sounds great. The Government response trumpets the fact that there will be computers in Jobcentre Plus offices. However, if we divide the number of computers by the number of Jobcentre Plus offices, we find that it works out at about three terminals per office, and I am not sure whether that will answer some of the questions about access to computers. Also, it appears that wi-fi is not yet available in Jobcentre Plus offices, although that is planned, as it should be available. Many people do not have a computer at home and will need to access their claim form through a public-access computer, whether in Jobcentre Plus or not. They will need help, and the Government’s response is not very clear about that. It does say that staff will be available, but it is very vague: it does not say how many or how much time they will have. Jobcentre Plus staff are already overworked. Will they have the time to sit down alongside someone until they have filled in their whole claim, or will they just get the screen up and leave them to it? For many people, that would not be enough help.
The Government say in their response that they are liaising with local authorities to supply help. However, we all know that local authority budgets are already being squeezed year on year, and that a lot of welfare rights officers, where councils have them, are disappearing, if they have not already done so. There is also a squeeze on organisations such as Citizens Advice. This is such a big undertaking that it is incumbent on the Government to make sure that this help, of the necessary quantity and quality, is there and that people know how to access it. It has occurred to me that as some local authority staff will no longer be employed in administering housing benefit, they might be an experienced resource that the Government could call on to act as advisers in providing the help that many people will need to make an online claim.
Another big area of concern about UC is that it will be paid once a month into a single bank account for each household. The Government’s response says that the Secretary of State has powers to vary the frequency of payments, but this would be time limited. It also says that the Department for Work and Pensions will try to identify claimants with, for instance, mental health or addiction problems who might not manage monthly payments, but suggests that help will be provided for only a limited period. The Government seem to think that a drug addict will somehow be able to learn how to budget properly after a couple of months. The essential problem is that getting a whole month’s money in their hand at once might be too tempting. I do not think that what the Government describe as “transition to monthly payments” after
“getting help with monthly budgeting”
is going to work in practice. Will the Minister clarify that?
Sheila Gilmore (Edinburgh East) (Lab)
As the Chair of the Select Committee, my hon. Friend knows, but I suspect that other people do not, that we have been hearing evidence about the apparent lack of information held by Jobcentre Plus about people’s circumstances in relation to being placed in the Work programme. Jobcentre Plus may therefore be unaware that people are homeless or have other difficult circumstances. What confidence does she have that it will be any better for the purpose of working out which people need this additional help?
Dame Anne Begg
I am worried that the Government say bluntly in their response to our report that they are not going to provide a definition of a vulnerable claimant. Without that, it will be difficult for Jobcentre Plus to identify the individuals who need help. This is our biggest area of concern. We do not know whether someone will need to get into trouble before they can get help rather than already having been identified as needing it.
Kate Green (Stretford and Urmston) (Lab)
I do not know about my hon. Friend or other right hon. and hon. Members, but I get paid monthly and my main outgoing, my mortgage, is taken on the day that my salary goes into my bank account. I think that I have had that arrangement ever since I first had a mortgage. Most banks and mortgage companies tend to arrange things with their customers in that way. They ask on what day people are paid and then arrange that that is the day on which they take the mortgage payment. Has the Select Committee considered whether there is anything the Government could do to help landlords, particularly social landlords, to collect rent in that way on the day that universal credit is paid?
Dame Anne Begg
We did not specifically consider that, but my hon. Friend has placed it on the record as something that the Government need to address. We do not know, either, to what extent they will allow direct payments into landlords’ hands. I hope that they are still considering that.
Glenda Jackson (Hampstead and Kilburn) (Lab)
Is it not the case that many of the people we discussed when we exercised our inquiries in the Select Committee have no access whatever to bank accounts, so that issue does not arise? Is it not also the case that social landlords are already extremely reluctant to accept housing benefit claimants, and that the idea that they will not be paid directly will reduce even further the already lamentable stock of affordable housing?
Dame Anne Begg
I thank my hon. Friend. I was about to come to some of those issues.
In our report we drew attention to the lack of suitable bank accounts. Again, there is not much detail in the Government’s response as to what progress has been made in persuading banks that they need to cater for this part of the market. Perhaps they need to be able to have some kind of direct debit facility. That would deal with the point made by my hon. Friend the Member for Stretford and Urmston (Kate Green) about people being able to manage payments, particularly the bulk of money that needs to come out of their account every month. Also, the payment must come out on the day after the money goes in, not the day before; that is another potential problem. Banks will need to be sensitive to this market. So far they have been very reluctant to provide products that will cater for these people, simply because there is not a lot of money in it for them. I hope that they do have a social conscience and will realise the importance of this, but the Government will need to do a bit of prodding.
The monthly payment regime involving almost the whole of a household’s income makes it imperative that the Government get the delivery right. If something goes wrong with a claim or there is a delay, that could lead to real hardship for anything up to a month, or perhaps even longer. For some families, only child benefit and council tax benefit will sit outside universal credit, and all other payments will depend on the right amount of UC being paid at the right time into the single bank account.
The move away from paying housing benefit directly to landlords and to the claimant instead is causing a great deal of alarm among social housing providers, and it may be acting as a barrier to the social rented sector renting to people who are on UC. This, alongside the introduction of what has become known as the bedroom tax, could mean that many housing providers will have a large shortfall in their rental income.
In its response, the DWP says that it does not intend to define “vulnerability” in case someone with complex needs falls outside the prescribed definitions and so does not get the help they genuinely need. Instead, full guidance will include
“financial vulnerability factors that would trigger a conversation with a claimant about their budgeting needs”.
I do not know how that is going to work in practice. We fear that the person who is struggling will be picked up after they have begun to struggle and are already in debt rather than at the early stages of their claim—or, rather, before the claim is made. There is a good chance that the people who struggle with their monthly payments will be the same people who find it difficult to pay their rent in full and on time, who do not have access to a computer, who are not computer literate, and who need face-to-face help in making a benefit claim because they do not have basic literacy. The DWP is unwilling to provide a definition of who is a vulnerable claimant, yet there is a whole list of things that would act as a pointer to the fact that someone may be vulnerable. I am really concerned about the danger that claimants will get into financial difficulties before any help is provided.
It seems from the Government’s response that the first solution will be budgeting support, rather than an alternative payment method. Perhaps the Minister could clarify that. How long will somebody have to wait before their rent is paid directly to the landlord or their benefit is paid more frequently? For how long will those solutions last? I understand that the DWP is running six direct payment demonstration projects that are due to run until June 2013. How are those demonstration projects going and how will their findings be incorporated into the roll-out of universal credit?
Our report points out that there is a need to decide how passported benefits will be dealt with under UC. I do not think that things have moved on much. Apart from the temporary solution for free school meals, the Government do not seem to have any ideas about how they will deal with that matter. Again, the Minister might be able to shed some light on that today. It is important that passported benefits operate effectively because for many people, they make the difference between a bare income and one on which their family can live.
One of the problems with passported benefits is that the Government have not managed to iron out the cliff edge that might be involved. The whole point of universal credit was to smooth away all the cliff edges. However, once passported benefits are put into the equation, a lot of the cliff edges come back.
It is important for other Departments to know how passported benefits will operate. They have always used the payment of social security benefits as proxies for certain qualifications, which has made it much easier and cheaper for them to administer their benefits. If there is nothing in universal credit that signposts a claimant as someone who should receive other things, such as free prescriptions, it could land the Department of Health, the Department for Education, other Departments and local authorities with a large administrative burden in order to work out who qualifies for other benefits.
Glenda Jackson
Free school meals are linked directly to the pupil premium. If there is a reduction in free school meals, it is entirely possible that there will also be a reduction in funding for schools. The implications of universal credit are infinitely greater than just the effects on the actual claimant.
Dame Anne Begg
That is why it is important that the Government get it right. I appreciate that it has been very difficult, but before the first claimants go on to UC, which is in just over a month, they need to start answering these questions. They certainly have to have an answer before it is rolled out to other claimant groups in October. They do not have very long.
This morning, when the Select Committee was taking evidence on the Work programme, we heard that universal credit has implications for the Work programme. There are questions about how people will be labelled when they go into the Work programme because the predecessor benefits, such as jobseeker’s allowance and employment and support allowance, will disappear under universal credit as people move on to the single benefit.
There is one benefit change that flies in the face of all of this and undermines what UC was intended to do. The localisation of council tax support will add complexity back into the system and introduce local variations, which could undermine the withdrawal rates that should make work pay. I have already talked about computer programmes. I have said that the customer-facing screens must be right and that, behind that, the programmes must calculate what a claimant should get and pay it into the bank. Those computers will have to speak to the HMRC computers so that the real-time information can be fed in. However, because of the proposals on council tax support, they must also interface with the local government computer system, which apparently is called ATLAS. I do not know whether that just applies to England and Wales. That is another potential IT difficulty that could cause problems for people. On top of that, it will be more difficult for claimants to work out whether they will be better off in work than it would have been if council tax support had been included in universal credit. That will rely on working out the tapers and the disregards.
To come back full circle, the delivery of universal credit will depend on the smooth delivery of the IT—not only the IT controlled by the Department for Work and Pensions, but that controlled by HMRC and local authorities. That is a big ask. My final question to the Minister is: how is that going?
Sheila Gilmore (Edinburgh East) (Lab)
When the Welfare Reform Bill was in Committee, the Minister’s predecessor was fond of the bookcase analogy. We were constantly told that what we were dealing with at that time was an empty bookcase, which would shortly be filled. Ministers and some Government Members who have intervened in the debate today, rather than those who have spoken at length, tend to feel that because most commentators, interest groups and parties think a unified system that will take people from unemployment to employment is in itself a good thing, that somehow means we should not be critical of the policy or its contents.
We have reached a point where some of the books have appeared on the bookcase, but there are still large gaps, some of which may not be filled until the roll-out takes place. We should realise, and the Minister should appreciate that, as I understand it—he may correct us—the initial pathfinder will deal only with very simple cases and people who do not have any complicated family situations, so it will test only some elements of the system. After that, more books will doubtless appear. However, one can have the same bookcase as someone else yet disagree radically about what books to put in it. We need to have that debate.
We must be careful not to oversell the reform. Although we talk about universal credit as though it will be simple, in reality universal credit will have lots of arms and legs. It is an umbrella, so to speak, with lots of arms and legs, because there will be different categories of people who fall under this umbrella, who will have to meet different eligibility criteria, who will receive very different payments and elements of payments, and who will be subject to very different conditions in order to get their benefits.
There will be a series of different types of universal credit. I would not be at all surprised if, in a couple of years, for convenience, particularly those who work in the field will refer to employment support allowance universal credit applicants or unemployed universal credit applicants. Otherwise it will be difficult to explain the situation. Universal credit will not be and perhaps cannot be simple. We on the Opposition Benches have said repeatedly that simplification is not the be-all and end-all when one is dealing with people who have complicated lives.
We have to put the financial capacity to deal with monthly payments in place. The Minister may remember that during his previous incarnation in the Treasury we had a debate about basic bank accounts. One of the issues I raised with him in his previous role was the need to extend basic bank accounts and to make it compulsory for banks to provide them. He resisted that move at the time. He may come to regret that in his new role in the DWP because it might have been better if there were a better raft of basic bank accounts that people could access. The number of banks offering basic bank accounts has not grown in the past nearly three years; it has diminished. Where will people be able to have the moneys paid to? Will they be able to get such bank accounts? There are people who cannot access basic bank accounts, either because there is no bank in their vicinity that offers them, or because they are not allowed to have such an account for one reason or another.
Dame Anne Begg
There are indeed difficulties getting a basic bank account, but does my hon. Friend accept that there are also people who have had a bad experience with banks, particularly with direct debits, and found themselves overdrawn and incurring lots of charges, and who therefore do not want to use a bank account to manage the money they get through universal credit?
Sheila Gilmore
My hon. Friend raises another important aspect. People have run up large bank charges, often inadvertently, on a very limited income. They might decide not to use the bank account any longer because that is easier, or the account may even be suspended.
Many warm words have been spoken about credit unions, but if we are honest about it, in most parts of the UK—the situation might be slightly different in Northern Ireland—credit unions are pretty small and cover only a relatively small part of the population. If we seriously wanted to increase their use, we would have to fund that properly and give them some ability to expand to the extent required. I would be more than happy to direct constituents in that sort of difficulty to a credit union, but I know that the credit union serving the local area currently has very limited capacity to expand. We have to think about that extremely seriously.
Another question considered today was that of the direct payment of rent. There are six demonstration projects, and indeed a report was published some time ago, but it was what the researchers called a baseline project report. In other words, it effectively looked only at people’s attitudes and capacities before the project got going; it proves nothing about whether it is working. Further data published by the DWP in December 2012 showed that in four months 8% of rent had not been collected. At that stage, 316 tenants had already been switched back to direct payment to the landlord, and the range of collections was actually greater than the 92% would suggest. In one project in an Edinburgh housing association, 63 of the 1,832 tenants were switched back to direct payments in the first four months, which I think is a substantial portion in a relatively short period.
It also appears—this will have to come out in the research very clearly—that some of the pilots have excluded some of the people most likely to fail. The pilot in Oxford apparently excluded those considered to be vulnerable, and the one in Wakefield excluded those who did not already have a bank account, so some of the difficult cases have not been included. That is fair enough in a pilot, but those cases must be taken into account before it can be claimed that all will be fine when this is rolled out more fully.
Members have spoken at length about the “digital by default” approach. I am not a luddite. I think that moving towards online claiming, wherever possible, is a good idea. In fact, when I was the convenor of housing on City of Edinburgh council we started a choice-based lettings system. It was possible to apply through a newspaper, people could fill in a form in the more traditional way, or they could apply online. Some people, including tenants’ groups, told us that we could not do it online because people would not be able to access it. We replied that we were giving people the choice. The online take-up was actually higher than many people had feared. Some of them will be getting help to do that, and that is the distinction we have to see.
There is a problem with the top-line figure, which is constantly quoted, of 78% for the proportion of claimants who already use the internet. It is drawn from research done for the DWP. It revealed that 78% have used the internet, but only 48% said they used it everyday, and that includes people in work, on tax credits and right across the whole spectrum. When we break the figures down, we see, for example, that 60% of people who are in receipt of incapacity benefit said that they had used the internet, but only 31% used it every day. There are some important distinctions within these groups.
If the new system frees up more adviser time, that can only be a good thing, but we need to know that that is really going to happen and where it is going to happen. The current situation appears to be quite stressed already. I have been told, and claimants’ experiences tend to back this up, that in Jobcentre Plus in my city people barely get four minutes with an employment adviser. Time is very stretched as it is.
Mr Hoban
I have only just started making this point, so let me make a bit more progress.
Research suggests that 92% of advertised vacancies require applicants to have basic IT skills. Therefore, those without such skills are considerably limited in their employment prospects. By using the digital channel as the default, we will be able to identify individuals who are struggling to manage or who lack the basic skills to use online systems. In doing so, we will be able to target support so that they can learn these essential skills, thus improving their prospects of finding work. Work done by the Cabinet Office on internet usage demonstrates that 78% of existing benefits and tax credits recipients already use the internet. Our latest figures show that more than 51% of jobseeker’s allowance claims received by the Department are now made online. I think that that demonstrates that people will be able to do it. We need to encourage more people to go online and find ways to give that support. For those who cannot use the internet, telephony and face-to-face access will be available. Rather than accepting that people cannot use the internet, we should try to help them get on to it and use telephony and face-to-face access as a fall-back mechanism.
The hon. Member for Bishop Auckland (Helen Goodman) said that 10% of people do not have access to superfast broadband with a speed of more than 2 megabits per second. She will be pleased to know that people will not require broadband at that speed in order to access universal credit and make claims.
Dame Anne Begg
The Minister might not know the answer, but will there be a real person at the end of the telephone, or will people have to enter all their details by pushing buttons and never get to speak to anyone?
Dame Anne Begg
In my experience of the disability living allowance, it takes some time to speak to a real person because the caller has to push lots of buttons, and that in itself acts as a barrier.
Dame Anne Begg
Thank you, Mr Deputy Speaker, and I would like to thank everyone who has contributed to today’s debate, which has been extremely worth while in teasing out what the Government have done and the questions they needed to address. Some fairly meaty questions are still to be answered—not least the one about passported benefits, which I noticed the Minister did not answer, probably because it remains a thorny issue.
I suspect that the Select Committee will return to this subject in the coming months or years—depending on which side of the House is believed on the timetable for the roll-out. Issues will arise once things are up and running and once real live people are claiming the benefit. Because so much about the universal credit will depend on behavioural changes, it is impossible to say at this stage which side of the argument is correct as to how people will behave when people are faced with the reality of claiming the new benefit. On behalf of the Select Committee, let me say that this debate has provided a great opportunity for us to explore what we thought would be the most important challenges for the Government in the future.