Universal Credit

Baroness Ritchie of Downpatrick Excerpts

Wednesday 6th March 2013 Commons Chamber

[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.

--- Later in debate ---

[Ms Margaret Ritchie (South Down) (SDLP)]

I acknowledge the good work that my hon. Friend the Member for Aberdeen South (Dame Anne Begg), the Chair of the Work and Pensions Committee, has done on benefits and the implementation of universal credit, particularly the impact on vulnerable people. The Committee highlighted the fact that vulnerable people are usually benefit claimants and so will be subject to the overhaul of the benefits system, and that many communities, and particularly those who will need it the most, will be deeply impacted by the online universal credit—admittedly, a telephony service will be available—because they will have great difficult accessing it.

It is important that the DWP can implement the IT system. Back in 2008, in my former life as Minister for Social Development in Northern Ireland, I introduced a parallel system for household fuel payments. It was outside the benefits system, but it required the help of the DWP and was an extremely difficult job. There were people who fell outside it who should have been eligible, but because of the nature of the IT system things proved difficult. I say that by way of warning. Also, owing to topographical difficulties, some claimants might not have broadband access, which raises issues about payment methods, and then there is the question of passported benefits.

My party has been against the introduction of universal credit from the outset. It is a misguided and draconian change to the benefits system that will neither save money nor encourage people into employment nor protect the most vulnerable. We are for welfare reform, but not for unfair reform. We recognise the need for a simpler, more accessible benefits system, but these reforms are an attack on the most vulnerable and will actually end up costing the taxpayer more through transition and administration costs.

I am extremely concerned about the long-term impact of the tone that the Government have taken throughout this and previous debates on welfare reform. The persecution of those on welfare—labelled “skivers”—is socially divisive and acts to marginalise and ostracise many people suffering disability, illness and impairment. It is casting down the very people whom the Government claim to be encouraging into work.

As the Minister will be aware, social security provision is devolved to Northern Ireland and implemented under a separate system known as parity legislation. In a previous life, I had to implement some of it. Under that system, we normally have little scope for variation, which means that we will be subject to the worst elements of these measures. I welcome the flexibility arrangements the Government introduced in Northern Ireland enabling split payments—two payments a month, rather than one—and payments to be made directly to landlords, rather than to the claimant, but the core of the changes remains and will be extremely damaging for our people and economy.

We need additional flexibility, owing to our high level of disability—a throwback to the troubles, which left people scarred by violence and terrorism—and higher percentage of people dependent on benefits. I ask the Minister and his colleagues to work with the Minister for Social Development in Northern Ireland to introduce that flexibility. Earlier today, I asked the Minister of State in the Northern Ireland Office about this subject in Northern Ireland questions, but his reply left me aghast: he said we should be getting more people into work. That is fine and laudable, if the work opportunities are there, but they are not, so let’s get real. We need to support these people, not marginalise and persecute them. These measures are likely to push more people into poverty and, in doing so, increase the welfare budget.

[Jane Ellison]

I am clearly not as familiar with the situation in Northern Ireland as the hon. Lady, but I do not recognise her description of persecution, marginalisation and ostracism. The Committee accepted that there were definitely some people about whom we were far more worried than others, but we took the general view that the system had a reasonable chance of working for the majority of people, even allowing for implementation issues. I just do not recognise her description of the system.

[Ms Ritchie]

I was saying that there were particular circumstances prevalent in Northern Ireland that perhaps did not exist in other parts of the UK because of the higher number of people who were more vulnerable and dependent on benefits. We are coming out of a conflict situation and, as a result of that legacy of conflict, more people rely on benefits and are, through no fault of their own, unable to access or find work. Those job opportunities, which might exist here in Britain, are not there.

[Jane Ellison]

rose—

[Ms Ritchie]

I would like to finish this point and move on. The third report by the Work and Pensions Committee states:

“We consider that the implementation timetable is ambitious and that there is significant further work to be carried out to ensure that the needs of the most vulnerable claimants can be met.”

Let me turn to the cost of universal credit. The rationale given by the Government is that the legislation is about making work pay and helping people into work. However, the driving motivation appears to be cutting costs, with those on welfare easier to scapegoat than the tax avoiders in society. Moreover, the figures suggest that, rather than saving money, the changes will increase the welfare budget. The Government’s own impact assessment suggested that £2 billion was set aside to fund the transition to universal credit in the 2010 spending review period and that net transfer payments from the Government to households would be around £0.3 billion higher once universal credit was fully implemented and transitional protection exhausted, while the Institute for Fiscal Studies has valued the long-run cost of universal credit at around £1.7 billion in 2014-15 prices. Furthermore, it has been stated that £18 million—£13 million in resource and £5 million in capital—will be delivered to Her Majesty’s Revenue and Customs to cover the costs associated with implementing universal credit

That suggests that the new system will be not just ineffective, but expensive. Experience suggests to me that the costs of such a project are likely to go up rather than down, once the projections meet the reality, as was the case with the change from incapacity benefit to workplace capability assessments. That has been a difficult issue in Northern Ireland and a traumatic experience for those who have been put through it. The resulting volume of appeals—a high proportion of which were successful—illustrates just how ineffective the changes were. I feel—I suppose I say this with a certain level of temerity—that the Government do not seem to be heeding that lesson. I fear that there will be an even more catastrophic impact when universal credit is fully introduced.

I have made it clear that I am against the substance of this welfare reform and its introduction, and I am dubious that it will actually save any money, but I also feel that there are likely to be a number of technical and administrative issues that could be extremely problematic and that we could run into financial problems as the system is rolled out in Northern Ireland in April 2014. I ask the Minister to look at those. I would also ask the Chair of the Committee to look into this and perhaps work with the Social Development Committee in the Northern Ireland Assembly to see whether these issues can be worked through. The project has already been delayed because of IT problems, and I have had very little reassurance that that will not happen again.

[Mr Hoban]

Just to be clear, the project has not been delayed because of IT problems. That is a complete red herring. The hon. Lady should not read the stories that the shadow Secretary of State puts in The Guardian.

[Ms Ritchie]

I thank the Minister for his intervention.

[Stephen Timms (East Ham) (Lab)]

The hon. Lady is absolutely right: the project has been delayed. Ministers told us for a long time after the announcement of universal credit that all new applications for out-of-work benefits would be treated as universal credit applications from October this year. It is now absolutely clear that that date will not be achieved. It might be a year later, or even some time after that, but the project has certainly been delayed.

[Ms Ritchie]

I thank the shadow Minister for his intervention; I absolutely agree with him. The Minister will not be surprised to hear that I disagreed with him, because experience has taught us these things.

I seek clarification and an update from the Minister on the implementation of a computer system for the social security system in Northern Ireland to administer universal credit in line with the flexibilities that will be implemented there, notwithstanding—because of our special circumstances—the other flexibilities that I hope will be introduced. I understand that these are currently subject to negotiation and discussion between the Minister for Social Development and the appropriate DWP Ministers. What feedback will there be and what facility will be employed to use the lessons from the initial pathfinder areas in England to inform subsequent roll-out in Northern Ireland?

Governments do not have a great track record on implementing new IT systems, as seen with the Child Support Agency, the e-Border programme and the health service. The new universal credit system will likely require an even more complex system, incorporating real-time processing from pay-as-you-earn records. The Committee’s report makes it clear that there are significant concerns about the system’s capacity to operate between local and central Government. I fear that this will be even more challenging in the devolved Administrations. How satisfied is the Minister that there will be no more significant delays or cost overruns for the new universal credit payment system? Can he say with certainty that he will not be back before the House a year from now, explaining away delays and expensive setbacks?

Added to that, universal credit is to use digital self-service by default. That might sound good, but I have had little reassurance about the fact that the most vulnerable in society—particularly the elderly—are less likely to have access to computers or to be as proficient with newer technology. Reference has already been made to that issue in this debate, as well as to access to the internet and broadband, so I will not dwell on it further. However, notwithstanding our position on welfare reform and universal credit, I say to the Minister that it is important that the delivery of this benefit does not impact further on the vulnerable and disadvantaged in our community. It is important that the right systems are in place to ensure delivery is enabled, so that the most vulnerable can live a good life with some degree of benefit.