Universal Credit

Baroness Sherlock Excerpts

Thursday 9th September 2021 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I thank the noble Baroness, Lady Tyler, and all noble Lords for their contributions. The Government have very few supporters on this matter, and nor should they.

We have heard about the impact on poverty. Citizens Advice has said that 2.3 million people could fall straight into debt. That is because £20 is not a small amount of money. Basic universal credit for a single person over 25 will fall by 21% when this comes in. If they are under 25, the fall is more than 25% overnight. The noble Baroness, Lady Eaton, may think the Government were clear about this, but Turn2us surveyed people last month and found that 36% of respondents were unaware this cut was coming. Rethink found that many severely mentally ill people, because they do not go online, have no idea this is coming down the track.

The defence we have heard from the Prime Minister, that the Government want to prioritise work, is simply misleading. We have been here before. Back in 2012, George Osborne tried to justify cutting £10 billion from social security by talking about the need for fairness

“for the shift-worker, leaving home in the dark hours of the early morning, who looks up at the closed blinds of their next door neighbour sleeping off a life on benefits”,

even though he knew he was cutting in-work benefits. Now here we are again.

The Prime Minister will know that 38% of adults in families on universal credit are employed. This cut is a direct blow to low-paid workers, including many we feted as pandemic heroes not long ago. The RSA found that 660,000 low-paid key workers, including nurses, supermarket staff and carers, will be hit by this cut.

The noble Baroness, Lady Tyler, is right: when the Government take £1,000 a year from low-income families, they should remember that this money is spent in towns and cities across the country. Poorer families spend their money because they cannot afford not to. Taking that cash out of the economy, when the recovery is so fragile, damages us all—disproportionately so in the north and the Midlands.

Let us remember one thing. There is a reason why the Government had to increase universal credit when millions of people flooded on to it: because people could not live on the benefits at the level they were at previously. They had gone up under Labour Governments —historically, they have not always been bad—and the Government cut over £10 billion out of our system, so people could not afford to live on the system that was there. As my noble friend Lady Donaghy pointed out, that is why the Resolution Foundation is right that if this goes ahead, we will be back to the lowest level of basic benefits for three decades.

We deserve a decent social security system and an economy with secure, well-paid jobs. We do not get there by plunging the poorest people into deeper poverty. Can the Minister tell us now whether the FT is right? Is there really internal modelling saying that this will have a catastrophic effect, leading to a rise in homelessness and poverty and soaring use of food banks? Is that true? I find it impossible to credit that a Minister would look at that assessment, shrug their shoulders and do it anyway.