Universal Credit

Baroness Stroud Excerpts

Thursday 16th November 2017 Lords Chamber

[Baroness Stroud (Con)]

My Lords, I thank the noble Baroness, Lady Hollis, for bringing this debate to the House at such a timely moment. I am delighted to have the opportunity to contribute on such an important matter. Due to time constraints I will restrict my remarks to the intended impact of universal credit on claimants and how it would be possible to ensure that universal credit was universally positive for claimants.

When the concept of universal credit was created, it was designed to address a welfare system—as we have heard—that disincentivised both work and progression in work, penalising those who worked more or less than, say, 16 hours per week, and that made the transition into work a complicated and illogical step to take. The vision therefore for universal credit was for a system that reversed those dynamics. Fundamentally, universal credit was designed to be a simpler system, combining, as we have heard, six separate benefits into a single payment, paid in arrears to mirror the world of work—a system that incentivises work and assists people as they move into and progress in work, and that makes work pay. Universal credit is designed to ensure that work is the logical choice.

It is a system that is proven to have a positive impact on claimants as they take and progress in work. Universal credit claimants invest more time looking for jobs—around 50% more than someone on jobseeker's allowance. Universal credit claimants move faster into work. Claimants who are unemployed are 4% more likely to be in work within the first six months of their claim than someone on jobseeker's allowance. Universal credit claimants work more hours, and they earn more. Universal credit claimants work, on average, 12 days more than JSA claimants in the first nine months of their claim.

It was for these reasons and with this vision that many on both sides of this House supported universal credit, and it is for these reasons that universal credit is having a positive impact on the lives of claimants. To repeat, as it is, universal credit is enabling claimants to move into work faster, earn more and progress further. These are the positive impacts of universal credit.

However, major reforms are never undertaken in a vacuum and, as we know, universal credit was introduced at a time of austerity. It was also launched with a “test and learn” approach at its heart and at a pace where it was possible to continually make adjustments to ensure that its original intent was delivered. It is for this reason that, as the Minister keeps her vigilant eye on delivery, I ask that she considers the following matters.

First, the fact that universal credit is paid in arrears is a feature of the legacy system. What is not a feature of the legacy system is the waiting period before someone is eligible to claim universal credit, which has become known as “waiting days”. This is not a design feature of universal credit, and should be separated in concept from it. In terms of claimant experience, I recommend that Her Majesty’s Government use each and every Budget to eliminate it completely. I do not think it should just be reduced; I think it should be abolished.

Secondly, I encourage the Government to use this Budget and each spending review to continue investing in the work allowances and taper in the same way as they restored the investment in tax credits, as it is the best way to support those who are just about managing.

Lastly, once these issues are addressed, there is one other item that would benefit the user experience of universal credit. With regard to childcare, if you are on a higher income outside universal credit, you can claim the tax-free childcare offer for as many children as you have. That is not the case for universal credit claimants. An investment of around £50 million could change that.

The Prime Minister has reiterated her commitment to both mental health and skills development, and I hope that this is reflected in a strong and continued commitment to universal support, extended beyond financial and digital inclusion to include family, mental health and skills support. I thank the Minister for ensuring that universal credit can continue to support claimants to earn more, move into work faster and progress in work, and I ask her to ensure that as she turns her mind towards the Budget—I understand that she cannot say anything now—under her department’s “test and learn” approach the issue of waiting days at least will be addressed.