Universal Credit

Damian Hinds Excerpts

Wednesday 19th April 2017 Westminster Hall

[The Minister for Employment (Damian Hinds)]

It is a pleasure to serve under your chairmanship, Mr Nuttall. I echo what the hon. Members for Newcastle upon Tyne North (Catherine McKinnell) and for Wirral West (Margaret Greenwood) said about PC Keith Palmer and all the victims on that terrible day when last this debate was convened. I congratulate the hon. Member for Newcastle upon Tyne North on securing this important debate. We have had a wide-ranging debate today.

Let me be clear at the outset that the roll-out of universal credit continues to plan. As Members are aware, universal credit is now in every jobcentre in the country. The programme has just passed an important milestone of more than 1 million claims. The service has been deliberately rolled out in a steady way, as alluded to by some of my hon. Friends, using a test-and-learn approach to allow us to user-test the service and get immediate feedback.

In such a large system and organisation, with so many branches and so complex a set of data, I admit that sometimes things go wrong. That is not unique to universal credit, but happens and has happened on occasion for many years throughout such systems. Of course we very much regret that when it does happen, but it does not change the fundamentals of what the universal credit programme is achieving.

The longest-standing senior responsible owner and programme director in the programme’s history are in place, and both have been in post for well over two years. In that time the programme has stabilised and delivered all its key milestones on time and on budget. When last scrutinised by the Major Projects Authority, the programme was moved to an amber rating, which is rare for a project of this size.

Even having the best team in charge is not necessarily enough: it has to be combined with the right project disciplines and the proper oversight to ensure success. That is why the team is implementing a fully developed, agile approach to delivery, explicitly designed to ensure that the service is continuously improved, based on the user feedback that I talked about, and is flexible enough to adapt to changing circumstances or new information. The programme is also subject to comprehensive and rigorous review internally and externally.

All that combines to create the safest, most secure programme delivery achievable. We are working quickly, and will continue to do so, to deal with any challenges, which will of course emerge, to ensure that universal credit is delivered safely and securely. I recognise that there are concerns, and I welcome another opportunity today to discuss and address them.

As part of the UC full service implementation process, we had a full external stakeholder plan to ensure that those stakeholders have a proper introduction to the full service before it goes live in their area. The full service was launched at the Newcastle West jobcentre on 15 March 2017, making Newcastle one of the first core cities to transition fully to the service. I am also aware that the hon. Member for Newcastle upon Tyne North has been in contact with the local district manager for Jobcentre Plus on more than one occasion and that she has been invited for a visit.

A couple of hon. Members asked about the changes being made in the DWP estate. I reassure them that in the planning and modelling we of course account for all the changes to welfare systems and our support for claimants. An important point to make is that although we are changing some of the physical estate, which involves some jobcentres merging with others, we are not cutting back on our frontline people—in fact, we expect to have more work coaches working with and supporting people into and in work at the end of this process than we do at the beginning.

The scale and nature of the change represented by universal credit is bound to cause some anxiety, but the benefits it brings are many, going far beyond the £7 billion in annual economic benefits and even beyond the advantages to claimants of simplicity, stronger work incentives and personalised support. UC represents a generation-changing culture shift in how welfare is delivered and how people are helped, creating a system that allows people to break free from being dependent on welfare, to take control of their lives and to move into work. That will have an impact on a large number of people: we estimate that by the time UC is fully rolled out, about 7 million recipients will benefit from the advantages of universal credit.

We must remember that universal credit picks up from a flawed pre-existing system and strives to solve a number of problems that have for some time been thought to be near intractable. In the old system, complexity and bureaucracy had often served to stifle the independence, to limit the choices and to constrain the outlook of its recipients. With UC, we are untangling the bureaucracy, strengthening the incentives and simplifying the system and the signals it gives.

The behavioural effects we are seeing are strong. Claimants are responding to the clear incentives to work and, as my hon. Friend the Member for North Swindon (Justin Tomlinson) said, spending twice as much time looking for a job as they did under the legacy system: 113 people are moving into work under the new system for 100 under the old system. People throughout the country are therefore already benefiting from universal credit, and more will do so.

The design and structure of UC is transformational in its focus on replicating the world of work. UC encourages claimants to take greater responsibility for their finances and incentivises them to earn more and to make progress once in work. A flexible, clear and tailored claimant commitment helps claimants to understand fully their responsibilities, and a work coach provides personalised support, helping people to stay close to the labour market and to overcome whatever barriers they have to work.

Critically, universal credit removes the hours rules and the cliff edges that have long been a feature of our systems, plaguing legacy benefits and tax credits. UC removes the need to switch between different benefits as people move into and progress in work, simplifying the system and ensuring continuity. It provides a consistent taper for claimants as they move into and through work. The recent taper reduction will benefit 3 million claimants once UC is fully rolled out, providing further tangible and visible benefits to making progress in work.

Thanks to the real-time information link, immediate adjustments can be made to the UC award, which is far beyond the blunt mechanism of annual reconciliation. That also means that people can quickly see the effect of the changes they are making. For the first time we now have simple levers to optimise the system, creating a fully dynamic and adaptable welfare system fit for the modern world. Digital is at the heart of the new system. The majority of jobs these days require some computer capability and competency, so it is also right that the system to help people into work is digital, too, as well as more efficient as a result.

[Stephen Timms]

Will the Minister give way?

[Damian Hinds]

If the right hon. Gentleman will forgive me, I will not, or I will run out of time.

Let me assure the House that I recognise what a complex and important issue housing arrears are. Many different factors are at play. As colleagues know, UC pays housing costs directly to the claimants and they pay rent to their landlord. That mirrors the world of work, which is an important part of the fundamental culture change I mentioned. That of course has been the case for some time, since the Labour Government rolled out the local housing allowance in the private rented sector in April 2008.

[Catherine McKinnell]

Will the Minister give way?

[Damian Hinds]

I will give way to the hon. Lady, because it is her debate, but I am also conscious that I am running out of time and will not be able to cover everything.

[Catherine McKinnell]

The Minister made reference to housing payments mirroring the world of work, but I am aware of no workplace in which the employee is expected to wait six weeks or more for payment.

[Damian Hinds]

I am grateful to the hon. Lady for making the important point about the timing of payments to individuals. No one should wait more than 45 days for their first UC payments, unless they are exempt from waiting days, which the hon. Member for Strangford (Jim Shannon) mentioned. Various exemptions include those for prison leavers and for people coming across from other benefits, such as income-related JSA or ESA. For those exempt from the waiting days, the wait is no more than 38 days. A claimant who cannot wait that long, however, may apply for an advance of up to 50% of the total award to provide support through to the UC payment being made. That is an important facility, and we continue to work on raising awareness of its availability.

There have been some delays in the payment of the UC housing element, largely because of, for example, mismatches between what claimants tell us and what landlords tell us is the rent due. We continue to work on process improvements around that. The pre-existing system was itself far from perfect, and we believe the processing times for the UC housing element are about the same as those for local authorities paying housing benefit. According to research by the national organisation for ALMOs—arm’s length management organisations—three quarters of tenants on universal credit were already in arrears before coming on to UC. Nevertheless, we continue to address those issues and we recognise that further improvements can still be made. That includes a dedicated team to handle the processing of rental information for both claimants and landlords.

In Newcastle upon Tyne North, the claimant count has come down by 36% since 2010, but of course we have to continue to support more and more people into work as they fulfil their potential and ambitions. Colleagues will know that implicit consent has been restored to MPs. There are particular sensitivities and difficulties about the breadth with which implicit consent can be granted, given the depth of personal and sensitive information within universal credit to which the individual claimant holds the key, but claimants are able to give explicit consent to advice agencies and so on as appropriate.

I fear that I am out of time. I conclude by saying that we must continue to work together to resolve issues as they arise and ensure a successful roll-out. We are standing on the cusp of historic change in our welfare state—a dynamic and fundamental change that is already transforming lives for the better and will improve many more. This is welfare reform in action—changing the dynamics in the system, making things simpler and ensuring that work always pays, to the benefit of millions.