Universal Credit

Baroness Buscombe Excerpts

Thursday 16th November 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I thank the noble Baroness, Lady Hollis, for introducing this very important debate. It has been an impassioned debate and I welcome the opportunity to respond on behalf of the Government. The Government are undertaking welfare reform on a scale not seen since the introduction of the welfare state more than 70 years ago. Universal credit is essential to this agenda, transforming a benefits system hindered by bureaucracy and welfare dependency into one that places personalised support for claimants at its very heart. This support, tailored to the needs of the individual, is transforming lives across the country. People on universal credit have access to more tools than ever before to help them in their search for work and move into work faster than claimants under the system it replaces.

We know that these reforms represent a significant change for many people and we respect that, but this Government are committed to delivering UC safely and fairly to the best of our ability. At every stage of the process to date, we have worked to modify our approach with claimants’ experiences in mind. This is why we pioneered a system of advance payments for those embarking on a UC claim and why we recently ensured that all calls made to the UC helpline are free to users. We continue to spend more than £95 billion a year on benefits for people of working age, illustrating this Government’s commitment to a robust welfare safety net.

When the coalition Government came to power in 2010 it was clear that the benefits system was broken. For too long, and in too many cases, it made more financial sense for people to stay on benefits than to enter employment. A system had developed over the years that limited the hours claimants could work. Inadequate reporting requirements and complex interactions with other benefits all combined to remove incentives for people to take up work. Under UC, 86% of people are actively looking to increase the hours they work, compared with only 38% on jobseeker’s allowance. Even more troubling, the benefits system—the legacy system—made assumptions about people with health conditions or disabilities, wrong assumptions in many cases, condemning many to a life of limited or zero horizons. In contrast, UC brings coherence and simplicity to the welfare system. It replaces six benefit systems with one.

People now deal with one organisation only, through an easy-to-use online journal. They can access their UC account via smartphone, tablet or PC, enabling them to interact with the service all day, every day. However, I will say straightaway to the noble Baroness, Lady Sherlock, that they can also have home visits where necessary—that should be a 100% commitment. As I have stressed, the key achievement of this reform is that it puts work back at the centre of everything we do. This means that people claiming UC can see that work always pays. They can see exactly how much money they will receive each month. UC applies a consistent taper rate to earnings above a claimant’s work allowance, meaning that people are no longer penalised for taking on more work. Thanks to a data feed from HMRC, the UC payment adjusts automatically to take into account fluctuations in earnings. This removes the burden of paperwork and reporting on claimants that exists in the old system.

From the very start of the programme, we have published findings from pilots, carried out analysis and commissioned research into UC. We continuously measure the impact of UC on claimants through our Universal Credit at Work publications, which have acted to highlight the positive effect our reforms are having on individuals. As my noble friend Lady Stroud said, research from these reports shows that people in receipt of UC are more likely to be in work than are people on jobseeker’s allowance. UC claimants spend longer looking for work and consider taking jobs they would not previously have looked at. This positive trend was recently confirmed by new analysis published in September 2017 using a much wider sample group. The concept of “test and learn” is built into the DNA of UC. It allows us to quickly pick up on feedback from staff on the front line and use it to build improvements into each new release of the UC IT system.

During a recent visit to London Bridge jobcentre, I was delighted to hear from staff who praised the collaborative spirit of the new system, with claimants, work coaches and central and local government working together to further refine the service. I have to say, in response to the noble Baroness, Lady Donaghy, that these work coaches were amazing: they are not drowning, they are actually enjoying the work that they do and feel liberated and able to help people daily. In fact, we are employing 5,000 more work coaches to help the system across the country, so that people have this personalised support system. I am looking at the noble Lord, Lord Livermore. I visited a jobcentre in his borough, his designated territory as a Peer. I wonder if he has visited—I think not.

There has been much debate surrounding claimants’ ability to manage under UC’s monthly payment structure. Let me explain that the month-long assessment period is fundamental to the idea of UC. It means that the UC payment can be calculated on the basis of a full month’s income, using real-time information. Beyond the assessment period there is a further time of up to a week to make final checks and for processing the payment. We are working to reduce this time, but let us be clear: of the current tax credits population, nearly 70% are paid monthly or four-weekly.

On the issue of the responsibility for paying rent directly to landlords, the change in this policy is also backed by the evidence. Indeed, much of this policy was introduced back in 2008 under a Labour Government. In 2012 we established projects in six areas across the UK to test claimants’ capability in this area. The results, published in 2013 and 2014, show that the majority of social tenants can manage their finances: they are completely capable and want to manage their finances. We believe that it is important to improve the financial confidence of tenants, many of whom—I think that this is shocking—were previously unaware of how much rent was being paid on their behalf. That is dependency; it is not liberating. The reports highlighted the need to ensure that the right protections are in place, should people fall into arrears, which is why we have put in place a system of alternative payment arrangements for claimants who need them. This means that we can pay rent directly to a landlord to help protect those claimants at risk of eviction. In response to the noble Lord, Lord Kerslake, it is actually a choice: it is either the claimant, the landlord or, indeed, the DWP who can decide whether it is in the claimant’s best interest that payment be made direct to the landlord. To address the point raised by my noble friend Lord Farmer, this, alongside the system of advance payments that I have already outlined, will support those claimants already in debt and help to prevent others from falling into it.

UC also shines a light on those in debt—I saw this when I visited London Bridge—so that work coaches can help them resolve this situation with personal budgeting support. I reference my noble friend Lord Fink and absolutely agree with him about debt. The recently published response to the report of the Financial Exclusion Committee recommends a much stronger focus on financial education in schools. Improving financial capability is at the heart of the Financial Guidance and Claims Bill, currently passing through your Lordships’ House. We all want to see the issue of debt tackled.

For people with health conditions UC offers greater independence and opportunity. Unlike the old system, it does not limit the hours which people can work. This means people with health conditions do not need to choose between starting a career and getting financial support for their disability. As was discussed in your Lordships’ House the other day, it recognises that the ability of people with health conditions to work will change, off and on. UC means you can do both. My noble friend Lord Shinkwin, the noble Lord, Lord Low, and the noble Baroness, Lady Meacher, spoke about people with severe disabilities. The financial support available to them is more generous than before. I take issue with the noble Baroness when she said she did not believe the sums, as they are actually wrong. People in the UC equivalent of the ESA support group get double the ESA equivalent. When we come to move people from these benefits on to UC, we will protect their payments and top up any cash shortfall. We have simplified the system to make this happen. Previously, people with disability had to grapple with seven different payments. Now it is down to one, but it is simply not the case that they will receive less. We have invested £200 million more in universal support, an issue raised by some noble Lords, including the noble Lord, Lord McKenzie.

The rollout of UC has been undertaken carefully, beginning with a small group of claimants in the north-west in 2012. From May 2016, we started rollout of the full service, to all new claimant types, to be completed in September 2018. We will then take stock, before we start to move people on legacy benefits to UC. I am not sure whether all noble Lords are aware of the important point that we have not started moving people who are on legacy benefits to UC. This process of managed migration will not be complete until 2022, with transitional protections offered to legacy claimants throughout. If you were to believe some recent media reports, you could be forgiven for thinking that UC is in crisis: far from it. As noble Lords have said today, public scrutiny—including debates such as this—has a valuable role to play in putting government policy under the spotlight. However, let me be clear: having a job, earning money and building a career is the best outcome for individuals, society and the economy.

As several noble Lords have rightly said, countless studies show that meaningful work increases people’s happiness, fosters social inclusion, and improves mental health, life chances and life expectancy. It is important to stress that, of the total number of households that will move on to universal credit, we are currently only 8% of the way there. By January it will be just 10%; we are not going to rush things. As we roll out universal credit, those on existing benefits whose circumstances do not change will not be moved to universal credit. This will not happen until 2019 and we will provide transitional protection at that point, to make sure that people—homeless, disabled or otherwise—are not worse off at the point of change.

Work is a positive health outcome and UC puts it back at the centre of the conversation about welfare, a point made eloquently by my noble friend Lady O’Cathain. A society where the maximum number of people is in work is a happier, richer, stronger one, in which everyone can feel empowered. It is always the duty of a civilised society to provide help for those unable to support themselves. This is not the same as saying that a life on benefits is the only choice for a person with disabilities or health conditions. That is why this Government make no apology for focusing on what people can achieve, rather than on what limits them.

I turn to a number of points made by noble Lords which I have not yet addressed. I stress to the noble Baroness, Lady Drake, that the benefit freeze is the subject of the next debate, to which my noble friend Lord Young will respond. There has been a concerted effort to misrepresent UC and to paint jobcentres as forbidding places, undermining our efforts to continually improve the system. It is important to make it clear that every two weeks the work coaches in every jobcentre pool their ideas for change. All those ideas and thoughts about improving the system are fed into the centre. We are taking those on board and working with them.

Advance payments for UC are paid within five days and are interest-free. If someone is in immediate need, they will receive a fast-track payment on the same day. We have taken on board the need to increase the awareness of advance payments and their availability, and have informed all work coaches of this. The latest data shows that 52% of new claimants on universal credit are receiving an advance. That shows that people are aware of this support, and using it. Unlike what one noble Lord said, everyone is entitled to an advance payment.

On the subject of jobcentre closures, we are not reducing the level of support we provide to claimants through the reduction in the number of jobcentres—far from it. We are actually streamlining the number. I go through the contracts for the commercial leases, so I know that we are saying goodbye to some that were not accessible or good places to come into. We want to improve and streamline the whole experience for people going into a jobcentre. I again urge noble Lords to experience this themselves: they will see that jobcentres are worlds apart from what they used to be like. It is important for us to modernise and improve that experience. When we close a jobcentre, an outreach service is always put in place within the community, to make sure that local people can access support to get to work.

My noble friend Lord Cormack mentioned targets to sanction claimants. There are no such targets for jobcentre staff. Sanctions encourage claimants to meet their personalised claimant commitment, which is tailored and agreed between the claimant and work coach. On childcare, the best way to help families improve their lives is by supporting parents to get into employment. Universal credit offers parents unprecedented personalised support, including paying up to 85% of childcare costs. This increase to 85% will benefit up to 500,000 working families by an average £60 a month. This means that a growing number of families will get more support to move back into work. I pay tribute to the work of the noble Baroness, Lady Armstrong, who referred to kinship carers, as did the noble Lord, Lord Kirkwood, in the context of welfare reform. I wish to make it clear that if a claimant already has two children in their household and takes on responsibility for an additional child through kinship care, the Government do not wish to dissuade this from happening in the interests of the child, and an exception is provided. The exceptions are an important part of this policy and are there to protect those who are not always able to make a choice about the number of children in their family.

There is much more that I would have liked to have said in response to points made by noble Lords. I conclude by reiterating that UC prepares for work, and helps people to get into and get on in work. The Government are delivering this once-in-a-generation change in a controlled way. We are taking 12 years, from inception to final rollout. At each step of the way we have assessed the impact of UC on claimants. This is a work in progress and we will keep working. As the noble Baroness, Lady Sherlock, said, let us work together to make this right.