Universal Credit

Baroness Sherlock Excerpts

Thursday 16th November 2017 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, this has indeed been a powerful debate. I am indebted to my noble friend Lady Hollis for opening it with her characteristic combination of passion and mastery of detail. I am also grateful for the contributions of all noble Lords, who, between them, have told the story of universal credit, from the original dream, the plans, the delays and the stumbles, to the reality of the gap between the dream and what now is.

On 13 September 2011, the noble Lord, Lord Freud, stood at that Dispatch Box for the Second Reading of the Welfare Reform Bill. He described universal credit as,

“the most radical reform of the welfare system since its invention”.

He told us:

“It will be simple to understand and access”.—[Official Report, 13/9/11; cols. 628-9.]


He also assured us that everyone would be on it by 2017.

He described a seamless system that would ease the passage into work, make people better off and ensure that work always paid. He claimed that UC could lift nearly 1 million people out of poverty. Those promises were the basis on which Parliament voted to adopt universal credit, so to ask whether the system meets those promises is not to play politics, it is to judge the Government by the standards that they set for themselves.

If any noble Lord opposite ordered a hire car and were expecting a Rolls-Royce, and what they got was a battered old Morris Minor with a flat tyre and a broken back window, I do not think that they would be very happy if the company said, “You don’t really want to go home. If you wanted to drive, you would just get in it and go”. We are merely asking that the Government deliver what they promised, and that is what is not happening.

It does not help to get into a political game of pretending that tax credits were all dreadful and universal credit is all perfect. I worked as a special adviser in the Treasury alongside my noble friend Lord Livermore. We were all trying to do the same thing: to make work pay, to lift people out of poverty and to have a system that works for everybody. Let us try to work together to get this right.

The noble Baroness, Lady Stroud, described what universal credit was meant to do. Of course, in that conception, it was a much more generous system. It had a 55% taper; it had more support; it had full universal support; it was a very different creature. We have to work out what is happening now, but it has been subject to repeated cuts from the Treasury, a point made by many noble Lords, including my noble friend Lord Livermore in a very powerful speech, the right reverend Prelate the Bishop of Durham, the noble Lord, Lord Low, and many others. We have heard many noble Lords demolish the idea that universal credit, as it is now constructed, always makes work pay: it clearly does not, and we need to get to a place where it does. My noble friend Lady Hollis made that very clear.

I am also sorry to say that we do not yet know if it works to help people to move into work, because the only evidence is research done before the work allowances were cut, back in the days when most people on universal credit were young single people, not those with kids or disabilities. We just do not know; the jury is out.

As for supporting people into work, the idea is meant to be that the claimant and their work coach work together to produce a personalised claimant commitment. That was the original vision, but I am hearing too many complaints about the variable quality of work coaches. The Government’s own research shows that most claimants feel that they are given a one-size-fits-all demand that does not meet their circumstances.

Although the carrots have been taken away, my worry is that the sticks are still there and the Government will have to lean on them. We have heard concerns about inappropriate sanctions on universal credit claimants, a point also made by the Trussell Trust. The trust also flagged up the problems emerging with in-work conditionality. In this new system, getting a job is not enough: if you do not earn enough money in that job to get off universal credit completely, you can be pushed to get more hours, or a second job, or to ditch your secure job for a better paid job. That is not very easy if you have kids or caring responsibilities. The system has to work before those sticks are wielded at people, and I do not think that they should be wielded that way anyway.

My noble friend Lady Donaghy made a very powerful case about the problems facing self-employed claimants. If the key argument for universal credit is a response to changes in income in real time, how can it be right to penalise self-employed people who are, across a year, earning the amount of money that the Government require, simply because they have good and bad months? That is what happens in business, even if they are not in seasonal work. Why can you get penalised if your profits drop one month because you have to pay the insurance bill? That simply cannot work, and I hope that the Minister will address this point.

Is universal credit working to lift 1 million people out of poverty? Sadly, as many noble Lords have said, it is having precisely the opposite effect. That is not surprising when we see the level of cuts in support that have been given, compared to the previous system. The CPAG shows that a lone parent earning £150 a week from working 18.5 hours would be £2,336 a year worse off than under the 2010 tax credit system. How is that progress? We have heard from the noble Baroness, Lady Meacher, the noble Lord, Lord Low, and my noble friend Lord Beecham about the problems for people with disabilities. The cuts in the severe disability premium and the challenges of using the system were well described by my noble friend Lord Touhig. I am very grateful to my noble friends Lady Armstrong and Lady Drake for highlighting the impact of the two-child policy on some kinship carers, despite the vote in this House to exempt them.

None of this will be offset by the tax cuts that get mentioned every now and again. As we have heard, they do not help the poorest. Even if the personal tax allowance were increased next week, somebody on £80,000 a year would get the whole benefit of that. A single mum working 35 hours a week during term time would not benefit from any of it, because she wouldn’t be earning enough.

The IFS used its gold-standard TAXBEN model to look at the impact of all of the fiscal changes that the Government have made. Its projections show that unless changes are made by 2021-22, 37% of our children will be living in relative poverty, the highest percentage since modern records began in 1961. For shame.

Is the system simple and easy to access? I need hardly go there, with all the stories that we have heard today. It clearly is not. I hope very much that the Government will address the long wait. I hope that Ministers will remember that, when the Bill was going through Parliament, noble Lords from all around the House pointed out that this would be a problem. That was in 2011, and I am sorry to say that almost every problem that has happened to universal credit was mentioned back then, during the passage of the Bill. The Government have had years to address this and they have failed to do so, so I hope very much that they are listening, but I am getting a little nervous, because now, in 2017, the problems are still here and are not yet being addressed.

The six-week wait clearly has to be addressed, but that is not a delay, it is a target. It is built into the system, and people simply cannot manage, as my noble friends have pointed out, without being supported much earlier. I am worried about how the system will affect vulnerable people—a point made by my noble friend Lord Cashman and others. I worry, too, about the implicit consent rule. I am also worried about the need to do this online. An advisor told me about a man suffering from severe depression who cannot leave the house, has no computer or internet skills and cannot manage an online account. The DWP has not helped him at all. His sick notes are now rejected by the jobcentre because he has to enter them online.

It is not working. We have heard descriptions of chaos, failing systems and problems. This has to stop. The problems with housing, mentioned by the noble Lord, Lord Kerslake, my noble friend Lady Warwick and others should be enough to ensure that it does. My noble friend Lady Andrews described the problems in Wales and other parts of the country, as did the right reverend Prelate the Bishop of Durham. I worry that the Government have not realised how serious this is. I do not blame the noble Baroness, Lady Buscombe. She has been gracious to deal with and generous with briefings, but she inherited this mess and she simply has to help her department sort it out. I worry that the Government have been complacent about the scale of the problems, and I have not been encouraged by some of the contributions from those sitting behind the Minister today. Either the Government believe that the problems are not very serious or they have decided that they are collateral damage—a price worth paying. Either of those is mistaken; and the second is, frankly, unacceptable.

It is not too late. This system is in serious trouble. As the noble Lord, Lord Cormack, said in a very powerful and helpful speech, what happens here results in human misery, and we need to address it. I urge the Government to take a deep breath now and stop. As my noble friend Lord Cashman said, leadership is not about ploughing on regardless; it is about stopping, pausing, listening to every word said here today, reading 650 pages of evidence given to the Select Committee and getting the system right before pressing on. That is the very least that this country demands.