Universal Credit

Debate between David Mowat and Sheila Gilmore

Monday 7th July 2014 Commons Chamber

[Sheila Gilmore]

Again, there is the theory and then there is what happens in practice. If in all cases the information from Her Majesty’s Revenue and Customs works, it should be reasonably accurate, but when people have very variable earnings there will be considerable problems, particularly with monthly payments, because it will take a long time to adjust for somebody whose earnings vary a great deal. That will leave some people in considerable hardship.

[David Mowat]

To answer the intervention made by the hon. Member for Ealing North (Stephen Pound), the whole purpose of having the real-time information interface out of the HMRC systems, which was a prerequisite to universal credit, was to address precisely that point.

[Sheila Gilmore]

I thank the hon. Gentleman for that intervention, but obviously there are other complications for people with very variable earnings, and I am not confident that they will all be overcome.

Finally, on the IT that we are expected to believe will be in place at some point, last week the Secretary of State delivered absolutely no clarity when we debated this in the Chamber. When I intervened to ask him what the end-state solution was, he replied:

“It is universal credit completely delivering to everybody in the UK. That is the end-state solution—live, online and fully protected.”—[Official Report, 30 June 2014; Vol. 583, c. 645.]

Again, that is describing the end aspiration in a very generalised way, but it tells us absolutely nothing about whether it will work.

Any change of this sort requires a lot of thought and practice. One of the issues about which there remains considerable concern—we have not heard a great deal about this from DWP—is the direct payment of housing benefit to the claimant and then to the landlord. To be fair, DWP has been carrying out pilots for two years to see how that would work, and I think that they have now come to an end. I understand that an independent evaluation is now with the Department, although it has not yet been published—perhaps the Minister knows more about that than I do. However, the data from the organisations that have been piloting it are now in the public domain. They looked initially at some 6,700 people —in different small groups across the country—that it was tested on. At the end of the pilot, 4,700 were still on direct payments, but 1,993 of the original group had been returned to having payments made directly to their landlord. That is a considerable proportion of the total. That rings some alarm bells on how well it will work. The landlords involved in those pilots have said constantly that it worked only as a result of very intensive work that has been done precisely because they are pilots. There is considerable concern that that will not be scalable to the required extent. Although I certainly commend the Department for running those pilots, we need to hear what lessons have been learnt, whether any further changes to the plans are required and how these things will be made to work in the longer term.

There are many other aspects of universal credit that people have raised concerns about. In many ways we have almost forgotten about some of the downsides, such as second earners being less incentivised to work under universal credit rules, as drawn up by the Government—they could be changed—than they are under the current system, and there is the fact that some families with disabled children will receive less than they do at the moment. There was a lot of debate about those issues, and the fact that we are nowhere near including some of those people is probably why those concerns have gone off the boil, but we should not forget about them. Even if universal credit is properly implemented, it is not a case of all winners and no losers, because a significant number of people will still be worse off under universal credit.

The detailed rules for universal credit can be changed, and in some ways that is where the bookcase has its merits. Some of the concerns about the rate of tapering of income, which has been changed since the original proposals, and how we deal with school meals, child care and families with disabled children could all be addressed. I think that it is a pity that at this stage we are so far away from those people being included in the new system that we do not even need to look for the answers. Just over 6,000 people are on universal credit, and that is predominantly JSA with a few changes, so the simplest of cases and situations. That is not really a fantastic achievement. I am sorry if that is describing the glass as being half empty, but that is certainly how it appears to me.

[David Mowat (Warrington South) (Con)]

It is always a pleasure to follow the hon. Member for Edinburgh East (Sheila Gilmore). This is the second time in a week that we have had the opportunity to debate universal credit. I will focus my brief remarks on some of the comments made by Labour Members, which I think can be characterised thus: “We are doing our job. If only the Secretary of State would do his job, everything would be okay.”

I had thought that it was agreed that universal credit is a much-needed project. It is a project of national significance. I think that it is analogous to the Olympics, but in fact harder to deliver. Opposition Front Benchers might give that some thought when considering how to conduct themselves in this debate. The project might be harder to deliver than the Olympics, but it is as important to our country. I will comment on the progress and some of the issues around that, and also talk at some length about Labour’s four-point plan—it has now been published—to “save” the programme, and a rattling good yarn it is too. I will not repeat the remarks of my hon. Friend the Member for Newton Abbot (Anne Marie Morris), but the project is a national imperative. We are trying to make work pay, to streamline benefits and to mimic the whole process of transition to work.

Developing a set of IT applications to be used by 8 million users is quite difficult. Frankly, neither political party has shown a great deal of success in doing that over the past decade or so. If we accept that it is a hard thing to do, then perhaps Members might try to do a little more than they have today in getting behind the 1,000 or 2,000 people who are working on the programme —working weekends and doing the stuff that needs to be done to get this to happen.

Are there problems with this project? I do not know; I am not an expert on it. I hate to say this, but I do not even serve on the Select Committee. Perhaps I am here as an imposter. I have had some experience of IT. I have spent a large part of my life explaining to people why IT projects are late and why it is not my fault but somebody else’s—I got quite good at that by the end. During a quality assurance test on an IT project—in fact, we do not have IT projects any more; this is a business change project—one of the indicators of difficulties relates to the number of project managers. If the project manager has changed a lot, there will be reasons for that: it is a very clear flashing red light. This programme has been unlucky—I use that word advisedly—in that it has had a number of different project managers who have had to move on for different reasons. Of course, that creates issues about how things are done, as in this case.

I listened carefully to what the hon. Member for Edinburgh East said about roll-out. It was not clear that she thought that the Secretary of State was rolling it out wrongly; rather, she seemed concerned that he had not told her in advance, at the start, how he was going to do it. That is an entirely different matter, because sometimes things are changed for tactical reasons. When the Olympics are being delivered, things are sometimes done in a different order. That is not unreasonable and not necessarily wrong.

[Sheila Gilmore]

I hope that the hon. Gentleman would not want to misinterpret what I said. There is nothing wrong with changing one’s mind and trying to adjust as one goes along, but what has been wrong has been the complete confidence, with each turnaround, in everything being fine and in how we should not be worried any more. We have seen that on several occasions.

[David Mowat]

As I said, I have not been serving on the Select Committee and I have not heard about the confidence she mentions. My point is that decisions are made during the life cycle of a programme that effect changes, and if, every time that happens—

[David Mowat]

I do not know, because I was not aware of that. The hon. Lady’s intervention, like much of her speech, is along the lines of, “We’re doing our job; if only the Secretary of State would do his job and hurry up and get this delivered, everything would be all right.” My substantive point is that delivering this application is harder than delivering the Olympics, and it behoves all of us to get behind the 1,000 or 2,000 people who are trying to do it. That is not to say that individual mistakes have not been made. There have almost certainly been lots of mistakes; it would be odd if there had not been.

As to progress, the issue is not that things have not been done; it is what we do now and how we deal with it. I am going to be kind to the Opposition and talk about the Olympics rather than the national health service project that wrote off about £10 billion. The Olympics was a joint success—a success for our country—and yet its budget increased by a factor of four. When the right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) came to the House and announced that the budget was going up by a factor of four, Members on both sides of the House, broadly speaking, tried to understand why that had happened, accepted it, and knuckled down to get the project delivered. In the end, there was not a cigarette paper between the two parties in terms of the approach to that project of national significance—as this one is. The Secretary of State and his team are trying to do a very difficult thing in delivering this application, to be used by 10 million people, in parallel with existing systems which, every week, continue to be used by 10 million people. Of course mistakes have been made; as I say, it would be odd if they had not. The issue is whether, on the whole, it is being managed correctly and whether, structurally, we are doing the right thing.

I had thought that Labour supported the basic tenets of universal credit, but some of the comments by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) about scope implied that she has severe reservations. She may be right; I am not an expert. It seems odd that Labour Members are raising issues such as scope at such a late stage of the programme. To some extent, they are the Opposition and perhaps it is reasonable that they oppose, but there is a difference between opposing and what I would call opportunistic carping—not only that, but opportunistic carping that is destructive, not constructive.

That brings me to Labour’s four-point plan, to which Mr Baldrick would have been delighted to give his name. Point 1 is to stop the programme and think about it for three months—not to review it, not to stop rolling it out, but to stop it completely. It is not totally clear to me what they would be stopping—development, implementation, the front end, the legacy systems and interface work, or perhaps all of it. It is not totally clear to me what they would do with the 1,000 people—to take a round number—who are currently doing all these tasks. They are saying, “No, let’s just stop it, with an immediate write-off of all that.”

Point 2 is to get the NAO to have a look at the programme. That is fair enough; one cannot argue with asking the NAO to look at something. Of course, it would have to use people with expertise in programmes of this type, of whom most of the good ones are in the civil service and working on this programme. Nevertheless, let us do it anyway.

The really interesting thing about the plan is points 3 and 4, which represent major, significant scope changes. If we make such changes to a programme right near the end, that is when everything goes wrong—when things have to be retested, budgets change, and all the rest of it. The great thing about these major scope changes is that, according to the four-point plan, they will be done at “no additional cost”. The two points propose to remove some of the onus on self-employed people and to continue to pay the primary carer.

On the train this morning, between Watford and Euston, I costed Labour’s four-point plan at £89,611,207.31. That costing—I am very happy to take an intervention on it—includes 11 new applications, 47 new screens, 190 database changes, 201 reports, a 40% test rerun, and 88 new interfaces. I may have spent only 11 minutes on the calculation to come up with that number, but that is 11 minutes more than Labour Members have spent on putting it into their plan and saying they can achieve it with “no additional cost”. I would be delighted if one of them wants to intervene on me—but intervention came there none.

[Sheila Gilmore]

rose—

[David Mowat]

Ah!

[Sheila Gilmore]

The hon. Gentleman should be clearer about why he thinks, for example, that making payment to the primary carer would have such huge costs, especially at a point when, it is fair to say, the systems are unlikely to have reached implementation for families with children.

[David Mowat]

The problem arises precisely because the systems are nearing completion. Costs in the life cycle of an IT project escalate the nearer to the end we get. To repeat a couple of the estimating parameters I used, Labour’s plan would require 11 new applications and 47 new screens. If the Labour party has its own estimate and it took it more than 11 minutes to put it together, I would be very happy to accept that it is right, but all it has done is write a sentence.

Budget Resolutions and Economic Situation

Debate between David Mowat and Sheila Gilmore

Wednesday 19th March 2014 Commons Chamber

[David Mowat (Warrington South) (Con)]

It is a pleasure to follow the hon. Member for Wrexham (Ian Lucas).

There are four tests of a Budget that we could reasonably apply. First, is the cake growing? Secondly, are we distributing it fairly? We will come to that. Thirdly, did the Budget get tempted by short-term electoral considerations or was it long-term and structural? Fourthly, when the Chancellor had an opportunity, was he radical and reforming? On all four measures, this Budget is a success.

First, on growth, as we have heard, we are the fastest-growing country in the OECD—that is a tremendous statistic—and growing faster now than even the United States and Canada. In particular, we are growing faster than France, the country on which I believe the Opposition base their policies. Secondly, are we distributing the results of that growth fairly? We just heard a speech about fairness from the hon. Member for Wrexham. Income inequality in our society is at its lowest level for 28 years. Why is that? Because this Government increased capital gains tax by around 40% when they came in and have increased stamp duty by more than that. Both measures are bringing in significant amounts of revenue.

The Opposition are caught up in the debate on the 45% and 40% income tax rates. That is not how to achieve more equality in society. People are getting rich because of capital gains. Five years ago I knew people who were paying 10% capital gains tax under the previous Government when they sold their businesses. We have fixed that, which is why income inequality is much lower now. A further reason is that we are getting a great deal more in revenue from sorting out tax avoidance.

The third test is whether the Budget was designed for short-term electoral gain or whether it introduced long-term structural change. Some measures will kick in fast. The £500 extra on the personal allowance will come in quickly, but the Chancellor has spent just as much money as he spent on that on the carbon price floor, support for energy-intensive industries and the investment allowance. None of those things will take effect in the short term and all of them are important to the structural rebalancing of the economy.

[Sheila Gilmore (Edinburgh East) (Lab)]

I do not know whether the hon. Gentleman has had time yet to look at the OBR report. The comment on the investment allowance in that report is that it will make very little difference to economic growth.

Annuities for Pensioners

Debate between David Mowat and Sheila Gilmore

Tuesday 7th January 2014 Westminster Hall

[Sheila Gilmore (Edinburgh East) (Lab)]

I apologise for missing the initial part of the debate because I was in a Select Committee.

The market is not completely free. The Government have already intervened to say that people should be contributing to pensions. People do not have a choice or increasingly will not have a choice not to take part. The Government have a responsibility to the people they have placed in that position.

[David Mowat]

That is absolutely the point that I am making. It is not a free market, and it behoves Government to do more than they have done so far to get it right.

One approach is to try to make the market work better—that was the subject of some of the points that have been made already. The other way of dealing with it is more dramatic. I believe it is reasonable that the Government think very hard and seriously about providing products that would compete in the market with the industry guys, because, in any event, the principal thing that annuity providers do is match Government bonds. One reason why QE has been an issue is that the industry is buying Government bonds in order to match income and liability. It is a classic middleman thing. It is entirely reasonable for the Government—a Government of either complexion—to look long and hard at that suggestion. I believe that will happen, because we cannot continue with the market abuse that has occurred over the past two decades.