Universal Credit Work Allowance

Craig Williams Excerpts

Wednesday 6th January 2016 Commons Chamber

[Craig Williams (Cardiff North) (Con)]

Thank you, Madam Deputy Speaker. I join other hon. Members in wishing everyone a happy new year. I will do my best to keep my speech under six minutes.

I rise to support the Government and welcome universal credit. Universal credit is one of this Government’s key reforms, and one that I am very proud to associate myself with. At the very heart of this policy is our desire to ensure that it always pays to go out and work. Families around the country will be better off at the end of this Parliament, with more of their income coming from their own earnings rather than the taxpayer. The Government are determined to set our welfare system on an even footing. The previous system did not work in terms of providing those who were willing to work with incentives to help them find it. It often paid more to be on benefits than on work, and that is simply not sustainable. As my hon. Friend the Minister set out, we are trying to move Britain on from that low wage, high welfare, high tax society to a higher wage, low welfare and lower tax society. That is the prism through which all this should be seen. We need to ensure that our system is sustainable and helps to protect the most vulnerable.

It is important to provide a bit of context given what we have heard from Opposition Members. Under the previous Labour Government, 1.4 million people spent most of the previous decade trapped on out-of-work benefits, the number of households where no member had ever worked nearly doubled, and the number of working-age people in poverty rose by about 20%. Not only did it not pay to be in work, but those who wanted to work found themselves either trapped on benefits or worse off. The Government’s reforms have already seen an improvement in employment statistics, with employment now at over 31 million—an increase of over 2 million on 2010. Wages are rising and living standards are up. For this reason, we feel that it is the right time to ensure that the barriers to work that previously existed are no longer a factor in employment.

Universal credit is designed to provide certainty in that regard. As a member of the Work and Pensions Committee, I am very impressed with the phasing in of universal credit and the Department’s attitude towards it. Some people have criticised the slowness of the process, but the willingness to pilot, to phase in, to pause, to reflect, to change and to start again is a massive testament to the Department. I encourage it to continue and not to be rushed by people, because it is a huge transformational change. I am very proud of what this Government are doing, which will really help people and create opportunities.

It is worth reiterating that the single taper rate of 65% means that financial support is withdrawn at a consistent and predictable rate, helping claimants to clearly understand the advantages of work. The taper is the big difference between tax credits and these changes. I think that the smoke and mirrors from Opposition Members on this will be seen through.

[Owen Smith]

Does the hon. Gentleman not understand that what we have argued here today is that after the cuts, which we are urging the Government to reverse, 6,000 people in his constituency will be worse off in 2020 than they would have been? It is very simple.

[Craig Williams]

I do not accept that. The shadow Secretary of State would have a lot more credibility if he came here with an idea of how to change the system and practical approaches rather than just opposing everything that this Government try to do. The previous Labour Government failed this country and failed constituents in Cardiff North. We are creating the opportunities. We need only look at the Labour Welsh Government to see their track record at creating opportunities. I stand by this Government and these changes.

[Owen Smith]

What about employment in Wales?

[Craig Williams]

Thanks to the UK Conservative Government—I thank the hon. Gentleman.

Not only does the universal credit system encourage people into work, it supports them through the process, staying with them and working with organisations such as Reed in Partnership, to which I pay tribute. Just before Christmas, it produced a survey of young people about the barriers to getting into work. The main things they said were about the importance of consistent career advice and the effects of receiving poor advice. These work coaches will really change things round for youth opportunities because someone will be dedicated to looking after people throughout the whole journey. I really welcome that. The Opposition should not be quite as jovial about this concept, which is a game changer.

The new system gives claimants the confidence to start a job without having to go through the bureaucracy of changing their benefit claim. We need to appreciate the transformational element of universal credit. Ninety per cent. of people who have already signed on did so online. This is a massive change in the way that we operate our welfare system, and it is extremely welcome. As I said, it is being rolled out in a very careful, safe and controlled manner. The Minister touched on that, but it is worth dwelling on. The findings from the December 2015 “Universal Credit at Work” report show us that, as we have heard, 71% of universal credit claimants moved into work in the first nine months of their claim. That compares with 63% of jobseeker’s allowance claimants. Universal credit claimants work on average 12 days more than comparable jobseeker’s allowance claimants. We need to recognise that and work on it, and provide proper support to ensure that people can achieve their ambitions and do not remain trapped in an unfair system, which is what the previous system was.

As part of that, we have put in place further measures that are directly related to the changes to the work allowance. The transitional arrangements are in place and they ensure that the benefit entitlements of claimants who are migrated on to universal credit by the Department for Work and Pensions—it is worth emphasising this again—do not fall in cash terms.

As I have hinted at, I want to dwell on the tapered relief for universal credit, which remains at 65%. I want to say that over and over again, because the shadow Secretary of State gave us smoke and mirrors. Unlike the planned tax credit changes, which would have resulted in an increased taper, the savings are achieved without increasing the effective marginal loss of benefit for every pound earned as a claimant moves into work or takes more hours. That means that work incentives are not adversely affected.

I am aware that you want to get everyone in, Madam Deputy Speaker, so I will conclude on that point. This really is a massive transition from the system that the last Labour Government presided over, which is not fit for purpose, sustainable or affordable for this country. I welcome the changes and the universal credit roll-out. As a member of the Work and Pensions Committee, I will pay particular interest to the issue and be a critical friend, but I welcome the roll-out so far.