Universal Credit

Eilidh Whiteford Excerpts

Wednesday 6th March 2013 Commons Chamber

[Dame Anne Begg (Aberdeen South) (Lab)]

On 22 November last year I was privileged to launch in the Chamber a Work and Pensions Committee report entitled “Universal Credit implementation: meeting the needs of vulnerable claimants”. That day I was the only one officially allowed to speak. As a result there are a number of hon. Members who are—I was going to say frustrated—itching to speak. I hope they will have the opportunity to do so now.

That day showed that there was huge interest in various aspects of universal credit and its implementation, so it is excellent that we have the chance to have this debate today, especially as the Government have now published their response to that report and we can look in more detail at the issues raised by the Select Committee. I expect hon. Members will also raise their own issues that we did not examine. It is a good time to revisit the findings of our report to see whether, three and a half months on, the Government have made progress in addressing some of our concerns. This has become more urgent because the first claimants in the pathfinder areas will begin to be assessed for universal credit in just over a month, and the roll-out for new claimants begins in October this year.

Universal credit is the Government’s flagship welfare reform. Everyone of working age who claims one or more of the many income-related benefits will, over the next four years, be moved on to universal credit. Some 8.3 million households will be affected once it is fully rolled out. Not all of them will be on the new universal credit, but they will be affected in some way, so if universal credit does not work in the way that it is designed to do or if the IT fails to deliver, it has the potential to cause a great deal of stress and anxiety in families who depend on the state for some or all of their income.

The size of the Government’s ambition in introducing universal credit became clear to the Select Committee as we began to receive evidence. Such a large-scale reform of the benefits system has so many aspects to it that we realised we would not be able to cover all the provisions in detail. We did not have time to explore fully all the incentives and disincentives to see which families would be better off and which would be worse off, who would lose money and who would manage to survive. Other questions were raised with us that we did not deal with in as much detail. Would families with high child care costs be better or worse off, for instance?

We did not have time to interrogate properly how robust the Government’s often repeated assertion is that under universal credit all people would be better off in work than not in work under all circumstances. Some doubt has been cast on whether that will be true. We know that under the system there will be notional losers, although the Government have promised that there will be some cash protection. We were aware, for instance, that second earners in the family may not mean that the family is better off under universal credit. We were aware also that families with particularly high child care costs might not be better off once those are factored in.

The reason it is often very difficult to reform a complex welfare system, of the kind we have in this country, is that there can often be unintended consequences, and I am sure UC will be no different. I am fairly sure that Ministers will admit that that is bound to be the case. Even if everything goes incredibly well, there will be unintended consequences. The real test for the Government will be how adept and quick the Department for Work and Pensions is in dealing with the inevitable blips; how it irons out the kinks, how it ensures that families do not face difficulties while it sorts out any problems and how quickly it responds when the inevitable difficulties arise.

It would have been impossible for the Committee to give detailed consideration to every aspect of universal credit, so we decided to concentrate on its implications for vulnerable claimants, which explains the report’s title. Not all benefit claimants are vulnerable; far from it. It is worth remembering that most people of working age who receive benefits are in work and are not dependent on the benefits system for all their income. However, it is probably true to say that all vulnerable people are benefit claimants. It is therefore imperative that the Department takes account of that and does not design a system that can be accessed only by people who can manage their lives fairly well. It must also be easy to navigate for someone who finds life a struggle. I mean someone who struggles to pay their bills, struggles to follow basic written instructions, struggles with poor health, struggles to use public transport, struggles to heat their home or struggles to put a nutritious meal on the table—someone who just struggles with daily living. Those are the people who face a complete overhaul of the benefits they receive. It was to those who might find the introduction of universal credit a real challenge that the Committee paid most attention.

The biggest barrier a vulnerable claimant might face is making a claim in the first place, because the Government are determined that universal credit will be an online benefit—“digital by default” is the phrase they use. The application will be made online, any change in circumstances or other information will have to be reported online, as will any change of earnings, but the sting in the tail is that the information might come from Her Majesty’s Revenue and Customs, so obviously the information has to get from HMRC to the DWP computers.

The most important aspect of universal credit’s delivery will be the IT. If it goes wrong, the whole system will grind to a halt. However, a digital system, in order to work, requires users—in this case the claimants—to have access to, and be able to use, the internet. There is still great concern that the people who need to apply for universal credit will not have access to the internet, or indeed to a computer, in order to make the claim in the first place and that, for those who are not computer literate, there might not be sufficient help for them in the right place.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

The hon. Lady makes an important point about accessibility. Does she share my concern that 36% of low-income households in Scotland do not have internet access at home?

[Dame Anne Begg]

The figures the Committee received vary greatly. We were told that as many as 80% of claimants might struggle with some of the IT and that as few as 20% would not have internet access. Although some people might be able to use Facebook and other social media sites, that is quite different from making a claim that, by its nature, has to include very personal information. Many people who do not have a computer at home might not be able to use computers in the public domain, such as those in internet cafes, because of security issues. There are many questions about access to computers and IT.

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[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to have the opportunity to speak in this estimates day debate on universal credit, and to follow the hon. Member for Leeds North West (Greg Mulholland). I am grateful to my hon. Friend the Member for Aberdeen South (Dame Anne Begg) for ensuring that we had this debate, as it is a really significant one that affects millions of our fellow citizens.

I shall concentrate entirely on the issue of online applications, in respect of which I think the Government are heading for some really big problems. The Department for Work and Pensions has been far too sanguine about the extraordinarily ambitious target to get 80% of people online by 2017. Shelter, in looking at the issue, says that it is

“not convinced that half of our current face-to-face service users could fully transfer to our digital services”.

I am convinced that the DWP will not be able to transfer them in the way suggested by the Minister. Let me explain to him why I take this view.

First, according to Booz & Company, which did a report for Go ON UK, 10.8 million people in this country do not use the internet. The D-E social group has the lowest percentage of households accessing the internet, with more than 40% of them unable to do so. According to Go ON UK, the group brought together by the industry to promote online skills, more than 16 million people lack basic online skills. They might have used the internet at some point, but they do not know how to do all the different things necessary to fill out an online form.

It is often assumed that it is simply older people who do not use the internet. In an interesting study in the Journal of Direct, Data and Digital Marketing Practice, however, Dick Stroud has conducted a thorough and forensic exploration of who these people are. I urge the Minister and his officials to look at this opinion piece published last year. It shows that, of the digitally excluded, 1.2 million people are young and excluded—in their early 20s and earning less than £10,000 a year. Another excluded group of 1.5 million people who earn less than £20,000 range in age from about 25 to 50. Then we have a group of 2.2 million people in late middle age who are uncertain, but open to persuasion that going online would be a good idea. These are large numbers of people, and they are precisely the people who will be making applications for universal credit. The crossover between the digitally excluded and the universal credit applicant is absolutely huge.

Furthermore, the Minister should converse with his colleagues in the Department for Culture, Media and Sport. Ofcom has reported today that 10% of the population—2.6 million households—cannot access broadband speeds above 2 megabits per second, and those are mainly in the countryside. The picture of the digitally excluded shows not people scattered evenly throughout the community, but people concentrated in particular socio-economic groups and geographical areas.

[Dr Whiteford]

The hon. Lady is making a very astute point. Some of my constituents do not have access to the internet, and those who do so often end up paying significantly more for it because of their geographical position. However, it is low-income families, wherever they live, who find it hardest to justify an internet connection in their homes, and at a time when libraries are being closed in areas of all kinds, it is increasingly difficult for those with low incomes to go online.

[Helen Goodman]

The hon. Lady echoes precisely my own thoughts. I urge the Minister to make a plan, and to look at the geography. He might then begin to be in a position to make a more accurate assessment of the problems that the Department will face, and to develop a more effective strategy for dealing with them than the Government seem to have at present.

Of course there are questions to be asked about whether the Government’s IT system will be up to scratch—we all remember the problems that arose with child support and tax credits—but the question in this instance relates to the capabilities of the population, and that is the other issue that the Government are completely ignoring. The last Labour Government spent more than £400 million on digital inclusion. Between 1999 and 2003, £396 million from the capital modernisation fund and the New Opportunities Fund was spent on enabling people to go online, and in our latter years in government we invested £30 million over three years in UK online centres, which enabled a further 1 million people to do so.

If 5 million or 10 million more people need to be enabled to go online, the Government ought to consider investing serious resources in a digital inclusion programme, but the DWP is spending £1.5 million, as are the Department for Business, Innovation and Skills and the NHS. There are 5 million or 10 million people whom we need to help, and we have a budget of £4 million—just for 2013-14; it does not cover later years. Given the rate at which this seems to work, that will help about 125,000 people. The level of resources and the extent of the focus on the problem are not remotely commensurate with the scale of it.

I am glad that today is an estimates day, because I want to ask the Minister about the motion on the Order Paper. How much of the £507 million “for current purposes” will be spent on extra support in jobcentres to help people who are not skilled, and how much of the £97.5 million “for capital purposes” will be spent on the computers that will be in the jobcentres to help people who do not have computers at home? I have tabled a number of written questions to DWP Ministers, but I have not had any clear answers. The Minister of State, Department for Work and Pensions, the hon. Member for Fareham (Mr Hoban), merely said that his

“survey of working age benefit and tax credit recipients found that 78% already use the internet.”—[Official Report, 29 November 2012; Vol. 554, c. 491W.]

There is clearly a mismatch between what the Minister is being told by his officials and what people in the technology sector are saying. I have also written to the Minister’s noble Friend Lord Freud asking about the Government’s strategy, but I have still not received a reply.

If we are to help those who are digitally excluded, we need to think about why they are excluded. Is it because, like 2.5 million households in the countryside, they cannot get broadband, or is because they are “self-excluding”? According to the surveys that have been conducted, about 50% of people say that they are not interested. Perhaps Ministers think that their “digital by default” programme will enable them to make people interested and to motivate them. I can hardly think of a worse learning environment than someone facing the stressful situation of their family’s income depending on whether they succeed or fail in the test. I can hardly conceive of a worse way of motivating people. People learn best when they are relaxed and are enjoying themselves in a friendly, warm environment. That is not what Ministers are doing. They are going to put extremely vulnerable people under this pressure.

Another issue is cost. Some 25% of people who do not use the internet say that is because of the cost. Half of them say it is because of the cost of access. As the hon. Member for Banff and Buchan (Dr Whiteford) said, an internet connection costs between £3 and £5 a week. People on jobseeker’s allowance and employment and support allowance will be receiving a benefit of £71.70, and after the bedroom tax they will be left with £23 a week; we know that because it is what our constituents tell us. The Minister is looking puzzled. That is what they will be left with once the cost of all their utilities has been stripped out. Based on what my constituents tell me utilities cost them, I have taken away £20 for heating, £10 for electricity, £6 for water rates and £4 for bus fare. That leaves them with £23. I have not included any money for a mobile phone or telephone connection or for a television licence. They also have to pay for things like washing-up liquid, loo paper and perhaps a pair of shoes once a year—a pair of trainers from Sport Direct.

These people will be forced to live on tiny amounts of money once the bedroom tax is introduced. If someone’s food budget is £18 a week, which is what my constituents are facing, I submit they will not want to spend £5 a week on an internet connection, as that would not be compatible with their way of life. There is also the cost of equipment. The cheapest equipment people can get costs £150. Ministers are therefore setting up a lot of people to fail. This is not a reasonable way to treat them.

I urge the Minister to look again at this. Exactly where across the country does he think the problem is going to arise? Will he publish a strategy? What kit is he putting into jobcentres? How much time is he expecting his staff to be offering people to support them? As Members have made clear, filling in one of these forms will take at least half an hour. In my constituency about 3,000 people will be eligible for universal credit. Although it is being phased in so that things will not happen all at once, if we say half of them can manage on the new system but the other half cannot, we will end up in a couple of years with 1,500 people needing help. If the Minister has put three computers into the local jobcentre and they are all operating for 50 hours a week, which would be an amazing feat, it would take 10 weeks for all those people to get their online applications made. The resources Ministers seem to be putting into this are not commensurate with the number of people who are going to need help.

I urge the Minister to look again at this. The Government are heading for a very significant train crash and, unfortunately, those on board the train will be the most vulnerable people in the community.

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[Sheila Gilmore]

There is undoubtedly a reduction in resources. Many of the advice agencies that I have contact with are having to tell people that they cannot get an appointment for three weeks, or even four.

[Dr Whiteford]

Does the hon. Lady welcome the fact that in Scotland Citizens Advice has had an increase of £5.7 million in recent weeks to cope with that situation?

[Sheila Gilmore]

I certainly do, although I rather regret that that money was so long in the coming given that it was available to be paid out some couple of years ago—but better late than never.

Finally, I want to discuss a particular group—single parents. Some of the problems I am going to consider do not necessarily result from universal credit as such, but they will not be cured by universal credit and may even be made worse. For many single parents, getting back into work is not easy. There is a great deal of evidence that many of them, when they do find work, find that it is low-paid and low-skilled work. There is a high level of churn because of the type of work or because of the practical difficulties that can arise. They may find that arranging child care is unexpectedly expensive or difficult—for instance, when they run into the summer holiday problem. All these things can lead to a single parent who wants to work finding a job and doing it for a period, but then having to leave and go back to the beginning again. Skilling up is particularly important.

Over the past few years, including under the previous Government, there have been several changes to the rules for single parents, particularly about their registering for work once their children reached certain ages. Considerable flexibilities were built into the system whereby, for example, a single parent would not be required to apply for a job, go for a job interview or take a job where it would not fit with their child care responsibilities. There are several such flexibilities, none of which, bar one, are in the new regulations that have been produced for universal credit. They are in guidance, but the problem is that guidance is not legally binding and these matters are at the discretion of an individual adviser.

There are currently 12 flexibilities, only one of which has been migrated into the new regulations in its entirety; the other 11 are not there or have been very much qualified. For example, under the regulations a single parent is still able to restrict the hours they work, but only if they can demonstrate that there are jobs with those hours available locally. If there are not, they cannot have that flexibility, so presumably they will have to look for a job that does not accord with their child care responsibilities or look for one outwith their area, which creates a whole new set of difficulties. Anyone who has had to pick up their child from nursery at a fixed time and has experienced the reception they get when they arrive back late because the bus has been delayed will know that working a long distance away is not easy.

It is not at all clear why these changes are being made. They might make it more difficult for single parents to get back into work. If the flexibilities are not there, the other problem that arises is sanctions. If people do not have those flexibilities, they may be required to take on a job—or to refuse a job—that does not meet their needs. If they refuse to take the job, they can be sanctioned. The level of sanctions was increased substantially in the Welfare Reform Act 2012 and the number of people who are being sanctioned is increasing. We are all seeing those people already. I would like the Minister to explain why the decision has been taken not to put the flexibilities for single parents into the regulations.

Gingerbread, which represents single parents, feels that getting skilled has been made more difficult of late. Again, there does not seem to be anything in universal credit that will help that situation. Previously, a single parent with a very young child who was on income support got a fee remission if they did a college course. That fee remission has been removed, so although a single parent with a child under five can still do a college course if they can fit it in around everything else that they are doing, they have to pay for it. When they hit the requirement to sign on for JSA, they will get fee remission for a course, but if a job offer comes up that they have to accept, they will either have to drop the course, which they might be part-way through, or continue the course and be sanctioned. That is not the way to upskill people. Gingerbread has proposed that a single parent who is undertaking a further education course, up to and including level 3,

“should be treated as fulfilling work search and work availability requirements”

until their youngest child reaches the age of seven or the course ends. That is a practical proposal.

There is serious concern that the structure of universal credit, far from enabling single parents to work, will not be of great assistance and might even be harmful. The Gingerbread report, “Struggling to make ends meet”, with which I am sure the Minister is familiar, points out that a single parent who is earning the minimum wage cannot expect their disposable income to increase by much once they start working 10 hours or more. We are talking about very short hours. For anyone who does not understand, we are not talking about 10 hours a day, but 10 hours a week. Somebody who works only three, four, five, six or seven hours a week will be better off under universal credit, but because of the structure of it, once they are working 10 hours a week or more, they will not be much better off. For all that has been said about universal credit making people much better off and encouraging them to go into work, the structure is not quite as good as has been made out.

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[Mr Hoban]

I want to return to the question of support and advice agencies, because the need to support people on to universal credit is an important issue that has been raised. Before I do that, let me talk about a couple of other issues that people have raised in this debate.

A number of hon. Members have raised the issue of online access. We should recognise that digital exclusion is a major issue affecting communities and individuals. It acts as a barrier to employment, as well to claiming universal credit. We need to lift that barrier and make it easier for people not just to claim universal credit, but to get the online and digital skills they need to get into work. Universal credit gives us an opportunity to move people online.

[Dr Whiteford]

Will the Minister give way?

[Mr Hoban]

I have only just started making this point, so let me make a bit more progress.

Research suggests that 92% of advertised vacancies require applicants to have basic IT skills. Therefore, those without such skills are considerably limited in their employment prospects. By using the digital channel as the default, we will be able to identify individuals who are struggling to manage or who lack the basic skills to use online systems. In doing so, we will be able to target support so that they can learn these essential skills, thus improving their prospects of finding work. Work done by the Cabinet Office on internet usage demonstrates that 78% of existing benefits and tax credits recipients already use the internet. Our latest figures show that more than 51% of jobseeker’s allowance claims received by the Department are now made online. I think that that demonstrates that people will be able to do it. We need to encourage more people to go online and find ways to give that support. For those who cannot use the internet, telephony and face-to-face access will be available. Rather than accepting that people cannot use the internet, we should try to help them get on to it and use telephony and face-to-face access as a fall-back mechanism.

The hon. Member for Bishop Auckland (Helen Goodman) said that 10% of people do not have access to superfast broadband with a speed of more than 2 megabits per second. She will be pleased to know that people will not require broadband at that speed in order to access universal credit and make claims.