Universal Credit (EAC Report)

Baroness Janke Excerpts

Wednesday 23rd March 2022 Grand Committee

[Baroness Janke (LD)]

My Lords, I too thank the noble Lord, Lord Forsyth, and the Economic Affairs Committee. As the noble Lord, Lord Kerr, said, it is a very august and illustrious committee, as I am sure it was when he was a member of it. It is of great encouragement to me, and I am sure to the noble Baroness, Lady Lister, and others, that we have this support for major changes to universal credit. I have to say that in the past we have not had a great deal of support for the kinds of changes proposed in the report, many of which we have raised. But I am encouraged today, and I hope that we have two people here who will see some of these fundamental changes through and campaign for them. I know the Minister; she is also a campaigner, and I know she will be very good at understanding the issues raised in the report and their effect on the people they apply to.

An effective safety net must provide realistic and accessible support for anyone who falls on hard times, whether through loss of a job, bereavement, relationship breakdown or other personal catastrophes. Any of these could happen to all of us in periods of our lives; they often do. The current system manifestly does not do this, as the report evidences.

The report identifies and analyses a range of familiar problems, as well as the lack of confidence, failure to understand how the scheme works and general feeling of powerlessness experienced by people who try to use the scheme, and gives practical recommendations. As many noble Lords have said, there is a need for a fundamental revisiting of the scheme’s finances. I know from reading the book Clashing Agendas by the noble Lord, Lord Freud, about the pressures in place when the Government tried to establish the scheme and set it on its way. As the report says, now is a timely moment to look at the fundamental financing of the scheme.

All noble Lords mentioned the crisis we face in energy and prices. The sticking plaster today in the form of an increase in the household support fund seems to show contempt for the suffering of so many people. As I said, I am grateful for the report because it does so much to analyse with the committee’s rigour and bring forward firm proposals that are deliverable, so I am hopeful.

As the noble Lord, Lord Forsyth, said, confidence in the scheme is extremely low. There is an overall perception of a chaotic system that is incomprehensible, inaccessible, intractable in its decisions and harshly punitive of any perceived shortcomings of claimants. I have written down some of the report’s themes that I hope the Minister will respond to, particularly the recommendations, which seem very sensible, as many noble Lords have said.

As I said, more funding is definitely needed to provide adequacy. The current level of support is quite rightly said by many to not be enough to live on. It needs to be a secure and fair scheme that provides proper support for claimants when they need it. So the recommendation that the Government should have committed

“to making the increase in the standard allowance permanent”

is very welcome. The recommendation also says:

“To avoid undue hardship and poverty it should also examine the relative levels of benefits for couples and those with children and investigate whether there are other claimant groups who do not receive adequate income.”


Many noble Lords have referred to the delays in the system. The five-week wait is ruinous for many people. I was encouraged to see that, during the lockdown, many people who would normally be in work were made aware of just how awful it is to have to wait five weeks when you have no money to put food on the table.

The inflexibility of the monthly assessment period has been fairly well documented—in fact, I think there has been a court case on it. The idea that people should be paid monthly because it corresponds to work takes no account of the way people work nowadays. It takes no account of the fact that people work on zero-hours contracts and that many need to have two jobs in order to live. Not only do they have to wait but, worse still, they have deductions made because they were overpaid because of the schedule, not because they have too much money. As I have said, for many people, it is incomprehensible that they should be put through this system.

The recommendations on conditionality, sanctions and the punitive approach are welcome. The suggestion of a written warning system is very helpful, because many claimants do not even know that they are going to be sanctioned or realise it only when they have just had their money cut. Similarly, I support the recommendation that deductions from universal credit be first subjected to an affordability assessment and made only in accordance with what the claimant can afford. I would like to see that brought in.

Some elements of the system actually increase poverty, including the two-child limit—if the right reverend Prelate the Bishop of Durham were here today, he would have a great deal to say about that—so I welcome the recommendation that the two-child limit be reinvestigated. I am not necessarily sure about the tapered allowance for large families; I would like to see the evidence that that would adequately support larger families before I agreed with it. However, we certainly support the ending of the benefit cap, which we believe is another direct cause of poverty for many people.

Many noble Lords, particularly the noble Viscount, Lord Brookeborough, mentioned that the Government’s response is not surprising. I am sure that the noble Baroness, Lady Lister, who has been campaigning on this subject for much longer than I have, was not surprised by it either. However, we are encouraged that the chilling economic circumstances described so ably by the noble Lord, Lord Bridges, might bring about some rethinking in the Government and hope that it will be an incentive. One hates to think that it needs a financial and economic crisis and a crisis in the cost of living to make the Government rethink, but if that happens, we will be very pleased to see it.

As many noble Lords have said, it is the most vulnerable who will suffer the most punishing circumstances in the cost of living crisis. The noble Lord, Lord Kerr, referred to indexing universal credit to the price of heating and lighting. That would be a welcome measure. The point on cuts in budgets over the past 40 years, made by the noble Viscount, Lord Chandos, is, again, one that we need to take into account. Comparison between the furlough and what people receive on universal credit is very telling indeed.

This has been a call to arms from the Economic Affairs Committee and I hope that the noble Lord, Lord Bridges, will take the fight forward as chair. I know that he will have plenty of people who will be willing to help him. I hope that, as a result, we might see a real advance. I again thank the noble Lord, Lord Forsyth, for his strength of purpose and his willingness to take on big challenges, and hope that he will continue to do so.