Universal Credit

Baroness Donaghy Excerpts

Monday 5th November 2018 Lords Chamber

[Baroness Buscombe]

My noble friend is absolutely right. The measures in relation to work allowance will make an enormous difference to families. The measure directs additional support in a package worth £1.7 billion across Britain, to some of the most vulnerable, low-paid working families. If a single claimant has responsibility for a child or qualifying young person, or has limited capability, they currently receive a work allowance of £198 per month and those with housing costs £409. With universal credit, raising the current work allowances will mean direct additional funding to working families with children, and working disabled people, by allowing them to keep more of their earnings before the taper rate is applied.

[Baroness Donaghy (Lab)]

My Lords, the Minister will not be surprised if I focus on the self-employed. The Social Security Advisory Committee has acknowledged that the main concern about the self-employed was not the grace period, though it acknowledged that a small extension is welcome, but the principle of the minimum income floor itself. Organisation after organisation submitted evidence to the committee to say that this would not work. The committee requested that,

“the Department should undertake a robust evaluation of the policy and its operation ... It is important to determine whether it operates equitably, what effect it has on the self-employed themselves, and what effect it is having on start-ups generally”,

and that,

“evaluation should extend to the related tests of ‘gainful self-employment’ which underpin the way in which the Minimum Income Floor operates”.

There is a fundamental flaw in the way that that has been structured. Can the Minister give some assurance that there will be such a robust evaluation of the policy?

[Baroness Buscombe]

My Lords, in all that we are doing with universal credit we constantly question and consider issues of substantive policy, because we want to make sure that the system works for the long term. The Government want to support people to be self-employed but it is right for them to be financially self-sufficient. Key to this is continuing to support people in, or considering, self-employment to progress to a level of sustained financial self-sufficiency. We recognise that it takes time for new businesses to grow and that even established businesses can experience difficulties. We will therefore provide all gainfully self-employed claimants with an equal chance and support from specially trained work coaches to grow their earnings, and to prepare and adjust for the application of the minimum income floor. We were going to move the minimum income floor to six months after migration, but have decided to introduce a grace period of 12 months.