DWP Policies and Low-income Households

Damian Hinds Excerpts

Tuesday 17th January 2017 Commons Chamber

[The Minister for Employment (Damian Hinds)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“welcomes last week’s Official Statistics showing that the poorest households saw the biggest income growth of £700 in the last year; further welcomes the impact of this Government’s welfare reforms in supporting low-income households to find work, with over 2.7 million more people in work and 865,000 fewer workless households than in 2010; recognises the role of Universal Credit in supporting people into work and increasing their earnings in work by ensuring it always pays to work; welcomes the recent announcement of a reduction in the taper rate to 63 per cent; believes that the Government’s reforms have given taxpayers confidence in an affordable and sustainable welfare system that ensures value for money and responds to the needs of claimants, with 86.6 per cent of Universal Credit claims currently being made online; and notes that the Scottish Government has asked for an extended timetable for the full transfer of the extensive welfare powers devolved under the Scotland Act 2016.”

As the Prime Minister has made clear, this Government are committed to building a country that works for everyone, not just the privileged few. The support that the Department for Work and Pensions offers through universal credit and Jobcentre Plus has a key role to play in delivering this.

Since 2010, we have made great progress in delivering a modern and effective welfare system. Our work coaches are providing professional and tailored support, exploiting the opportunities offered by digital channels, and for those hundreds of thousands of people already in receipt of universal credit we have ensured that work and progressing in work will always pay. Although we have had to make difficult decisions on welfare spending, we have never lost sight of the fact that the most sustainable routes out of poverty and just managing are to get into work and to progress in work, and universal credit lies at the heart of that, transforming the welfare system to ensure that work always pays—that it pays to participate, that it pays to progress. This is in contrast to the pre-2010 system; in-work poverty increased by 20% between 1998 and 2010, despite welfare spending on those in work increasing by some £28 billion.

We are building a fairer system that will mirror the world of work and we are eradicating the complexities and disincentives of the old system. There are no hours rules or cliff edges in universal credit, as there are in tax credits and other legacy benefits and which have historically, on occasion, provided the disincentive to work or to earn more. Universal credit also removes the need to switch between benefits as claimants move into and on in work, simplifying the system and ensuring continuity for claimants.

Our approach is working. The claimant count has dropped from almost 1.5 million in 2010 to about 800,000 now. Unemployment is down 894,000 since 2010, with near record levels of employment around the country. Once it is fully rolled out, we estimate that universal credit will generate about £7 billion in economic benefit every year and boost employment by up to 300,000, but we are not done yet. We believe that making work pay and opening up opportunities for people to realise their potential are central to building an economy that works for all. By reducing the universal credit taper rate to 63% we will further improve the incentive, helping up to 3 million households.

It is clear that for many disabled people the barriers to entering work are still too high. We need to continue to review and reform our support based on what we know works. We will build on the success of universal credit and provide more personalised employment support by consulting on further reform of the work capability assessment. Our Green Paper on health and work makes proposals that go further, marking a new era in joint working between the welfare and health systems.

Our change to the work-related activity component is designed to encourage and support claimants to return to work. We have allocated a total of £330 million for new employment support for people with limited capability for work over four years, starting from April 2017, and an extra £15 million for a top-up to the flexible support fund in both 2017-18 and 2018-19. It is also important to note that it will apply only to new claims and there will be no cash losers among those already in receipt of ESA.

However, looking at our benefit reforms in isolation fails to appreciate the Government’s wider work in providing support for those on low incomes. The single most important thing has been our stewardship of the economy and the strong growth that it has facilitated. People are sharing in the proceeds. Average household incomes are at an all-time high, income inequality has fallen and pay for the bottom 5% in society is up by 6.2% year on year, the highest rise since the series began in 1997.

I do not have time to list all the other advances we have made—the hour is late, time is short and many colleagues wish to speak—but it is important to acknowledge some of the most transformational. We have introduced the national living wage. We have increased the personal tax allowance to £11,000, so the typical taxpayer now pays £905 less tax per annum than they did in 2010. We have introduced the triple lock so that pensioners with a full basic state pension receive over £1,100 a year more than they did at the start of the last Parliament. We are extending free childcare—it will be interesting to hear what SNP Members feel about this—for three and four-year-olds from 15 hours to 30 hours, as well as introducing 15 hours of free childcare for disadvantaged two-year-olds and free school meals for all infants.

Tackling child poverty and disadvantage, delivering real social reform, is the key priority for this Government. Only by tackling the root causes of poverty, not just the symptoms, will we make a meaningful difference to the lives of society’s most disadvantaged children and families. It is for that reason that we introduced two new statutory measures, to drive real action on parental worklessness and children’s educational attainment, the two areas that we know can make the biggest difference to disadvantaged children. The forthcoming social justice Green Paper will build on those measures and set out how we identify and tackle the root causes of poverty.

Alongside our policies targeted at helping people to progress in work and fulfil their potential, we are also committed to continuing to modernise and professionalise the services and support that our jobcentres offer. If we are to deliver a service fit for the 21st century, we must make the most of the opportunities offered by new technology and recent shifts in demand. I am pleased that the motion refers to our plans for the jobcentre estate, as they are one of the best examples of how we are in fact doing that. After 20 years, Labour’s private finance initiative contract, which covers many DWP offices, is nearing an end—it expires at the end of March 2018. That gives us an opportunity to review how the Department delivers modern services and ensure that it gets the best deal. As I have already mentioned, reforms such as universal credit are revolutionising the relationship between claimants and work coaches, ensuring that the support we offer is more personalised and better suited to the needs of claimants.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

Will the Minister comment on the disability employment gap? Surely closing jobcentres will make attaining employment less accessible for people with a disability and increase the hurdles they face in doing so.

[Damian Hinds]

As the House knows, narrowing the disability employment gap is an absolutely priority for this Government, and I am pleased to say that we are now making progress on that, but there is a great deal more to be done—nobody denies that. We must ensure that there are more opportunities available to people with disabilities, including through our jobcentre network, but part of that is making sure that the right services are available and that we have the resources in place to be able to afford the people, facilities and courses that can help support those people.

The claimant count has dropped from almost 1.5 million in 2010 to around 800,000 now. In some cases we are using only 25% of the floor space in sites we are renting. That is 25% of the value for 100% of the rent. Every penny that we spend on space under Labour’s PFI is money that could be going back into the public purse, helping to protect vital services.

[Chris Stephens (Glasgow South West) (SNP)]

rose—

[Damian Hinds]

I am going to have to ask the hon. Gentleman for his forgiveness.

Those services and support include our own, because we are expanding what we do. In fact, we expect to have over 2,000 more work coaches in 2018 than we have today. In deciding what changes it is reasonable to make to the estate, we have carefully considered the impact on claimants, including travel times. We think that it is reasonable to ask somebody to attend a new jobcentre that is either less than three miles away from their existing jobcentre, or 20 minutes away by public transport. Of course, many claimants, including constituents of many Members on the Opposition Benches, travel considerably further than that, as of course do many people in work.

The UK Government have devolved powers for existing benefits worth some £2.7 billion to the Scottish Government. Scotland can also top up benefits and create new benefits. With that, of course, comes the corresponding responsibility and accountability. I was interested to note that the Scottish Government are returning to fortnightly payments and direct payments to landlords. We firmly believe that we should minimise the difference between the out-of-work welfare support system and the world of work to facilitate people’s transition into work. Few employers pay fortnightly and even fewer have a direct relationship with their employees’ landlords. We believe that our system, which still allows for alternative payment arrangements when required for vulnerable customers, is the right approach, but we appreciate that the Scottish Government have a different view. It will be interesting to see how the two approaches deliver. We shall see.

This Government’s record speaks for itself. Poverty is down, child poverty is down and the deficit is down. We had the fastest-growing G7 economy in 2016 and 2.8 million more people are now in work. We are all about a strong economy and a supportive, effective welfare system with work for those who can, help for those who could and care for those who cannot. Taken together, universal credit and our continued reform of Jobcentre Plus will provide the modern, effective and compassionate welfare system we need to continue to deliver on this promise: an economy and a society that work for all.

[Mr Speaker]

Just before I call the Labour spokesperson, I inform the House formally, as colleagues who are due to speak have been notified privately, that there will be a time limit of three minutes on Back-Bench speeches in my attempt to ensure—[Interruption.] Order. If the hon. Member for Glasgow South (Stewart Malcolm McDonald) listens, he will learn. The time limit is my attempt to ensure that everybody who sought to speak has the opportunity to do so. Fairness and equality, Mr McDonald.