Universal Credit (Children)

Eilidh Whiteford Excerpts

Tuesday 10th May 2016 Commons Chamber

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

We have had an unexpectedly concise, but nevertheless interesting, debate is afternoon. I echo the remarks of others who have paid tribute to the right hon. Member for East Ham (Stephen Timms) for securing the debate and giving us this opportunity to highlight the impacts that the universal credit scheme will have on children. Right at the heart of this matter are the recent cuts to the work allowance—implemented just last month—which are set to drive up child poverty quite considerably in the months and years ahead.

Back in January, when the Government performed their U-turn on tax credits, it was clear that the relief would be only temporary for many families. As we have heard today, the transition to universal credit will mean that 3 million working families will no longer be eligible for the support that they would have had under the tax credits system. A further 1.2 million working families will still receive support, but will be worse off. Therefore, according to the Resolution Foundation, 4.2 million families will be on average more than £40 a week worse off, even taking into account increases in the minimum wage and tax allowances.

When universal credit was first introduced, we were told that it would simplify and streamline our benefits system, that it would introduce greater flexibility for those in seasonal jobs or with fluctuating earnings and, crucially, that it would remove the financial disincentives to work created by the previous system. However, that is not what is happening in reality. The introduction of universal credit has simply been an excuse to cut family incomes, taking £3 billion a year out of the pockets of low-paid parents. As the Resolution Foundation report puts it, the latest cuts to universal credit risk leaving it

“little more than a vehicle for rationalising benefit administration and cutting costs to the Exchequer.”

That is a truly damning indictment.

The bottom line is that cutting the work allowance under universal credit has destroyed the very aspect that reduced work disincentives—the thing that made it a distinctive policy. The most potentially valuable aspect of universal credit has been butchered, and we are now left with a system that will reduce the incomes of more than 4 million low-income families. People are already working hard to support their families and are struggling to make ends meet. The change is set to send child poverty skyrocketing over the next few years. Far from creating work incentives, the reality is that cuts to the work allowance mean that parents in low-paid jobs face staggering levels of marginal taxation if they take on extra hours. There is no way around the fact that that reduces the incentive to take on extra work. If someone is going to be only 35p in the pound better off per hour, the extra earnings might not even cover their transport costs, much less their childcare.

Working single parents will be particularly badly affected by the changes, because they are being hit with dramatic income cuts. There is also a big disparity between those who live in rented accommodation and those who are owner-occupiers or otherwise not paying housing costs. In rented accommodation, a working couple with children will lose £234 a year, and a working single parent will lose £554 a year. The reductions in income are even starker for those not in rented accommodation. A working couple with children will lose more than £1,000 per year, but working single parents are set to lose a massive £2,628 a year on average.

[Angela Crawley]

A single parent already working full time on the national living wage—otherwise known as a modern increase on the minimum wage—of £7.20 an hour will have to work an additional 46 days a year, equating to two additional months. Does my hon. Friend agree that that is unacceptable?

[Dr Whiteford]

It is not only unacceptable, but completely unrealistic. When the measures were first debated, the Government tried to argue that families affected by the losses could simply work a few extra hours to cover the shortfall. Notwithstanding the availability of extra hours being entirely dependent on the employer’s circumstances—there might not be many extra hours going around in many workplaces at the moment—the Child Poverty Action Group pointed out, as did my hon. Friend just now, that a single parent working full time on the minimum wage would essentially have to work an extra day a week just to make up the shortfall. It is already hard for single parents to manage full-time work and family responsibilities, and I just cannot believe that it is good for them or their children for them to be taking on an extra day a week. Something has to give. People’s health will collapse. People’s children and family life will suffer. It is not the right thing to do.

The effect on families affected by disability will be disproportionate. At Work and Pensions questions yesterday, I mentioned the impact that the introduction of universal credit will have on disabled children. Some time ago, the Children’s Society and Citizens Advice published “Holes in the safety net”, a report which warned that the introduction of universal credit would mean dramatic cuts in support for some disabled children. Some 100,000 disabled children in the UK are likely to be affected and will see their support halved to just £29 a week. As we have heard today, families with a disabled child are twice as likely to be low-income families living in poverty. We know that. We also know that those who live with a significant disability face extra living costs, but it is sometimes too easy to gloss over the realities of day-to-day life for such children, their parents, and their brothers and sisters. Disability affects the whole family.

Some time ago, I worked for Carers Scotland and will never forget my conversations with parents of disabled children about their experiences, many of which were positive, but nevertheless also often enormously challenging, both financially and emotionally. I remember one working mother describing how she had had to give up a full-time professional career and work part time in a lower-paid job, simply because she could not find a nursery willing and able to take on the complex needs of her little boy. I remember another mother talking about realising that she would have to become a full-time stay-at-home parent after her second child was born with quite significant physical disabilities. She and her husband had recently bought a three-bedroom house to accommodate an expanding family, but they had to sell up and downsize, because that was all that they could afford on one income. At the very moment when they needed more space to accommodate growing toddlers and a wheelchair and to enable their elder child to sleep through the night without being woken up by a disabled sibling who needed care during the night, they were instead struggling to make ends meet. Families such as those, for whom £30 a week makes an enormous tangible difference to their quality of life, are being put on the front line.

On the other side of the coin are the cuts under universal credit to the severe disability premium paid to disabled adults, affecting some 25,000 children who live with a severely disabled parent. The level of support will be £58 a week less for such families. Even those in the ESA support group—those who have absolutely no prospect of being fit for work—will be entitled to £28 a week less than under the current system. That will inevitably have an impact on the children in those households, most of whom do not get any extra support at the moment, and it will make life even harder for young people who in some cases are already taking on age-inappropriate levels of domestic responsibility. The Government talk a lot about improving life chances, which we have heard again and again today, but slashing support for disabled children and the children of severely disabled adults who have no prospect of work will only harm those children’s already diminished life chances.

I asked the Government yesterday if their intention really was for low-income families and disabled children to bear the brunt of their cuts agenda. We have heard lots of suggestions today, such as those put forward by CPAG, the Children’s Society, the Resolution Foundation and others, for how the failing universal credit project could be redeemed, not least the need for a credible and up-to-date assessment of the overall impact on child poverty. Instead of trying to defend the indefensible, the Government have an opportunity to go back to the drawing board on universal credit and restore its original policy intent of supporting low-income working families. If they fail to take that opportunity, they will be confirming their reputation as the sort of people who think it is okay to make disabled children and hard-working parents in low-paid jobs pay for the tax breaks being enjoyed by the wealthiest in our society.

--- Later in debate ---

[Priti Patel]

My hon. Friend makes an important point. Of course, the point about the life chances strategy is that it will be a cross-government strategy. The focus will be integration and support. The troubled families programme has been very successful in transforming families and turning their circumstances around, supporting work and the right kind of outcomes. We are incredibly focused on and conscious of the need to integrate. Once the strategy is published, all hon. Members will see that completely.

The point about universal credit, of course, is that it removes barriers that prevent people from finding work and increasing their hours and earnings. Universal credit provides the right support to incentivise work and, in particular, removes some of the barriers that were in place, including the restrictions on hours worked, such as the 16-hour rule.

Not just in this debate but in others and in various Committees of this House, we have been very clear that universal credit claimants receive not only support from their work coaches but additional support for childcare costs. Our in-work progression trials have begun to test how work coaches can continue to provide tailored support to in-work claimants so that they can progress and, importantly, increase their earning capacity.

[Dr Eilidh Whiteford]

I know that the issue of in-work claimants is still at a fairly embryonic stage, but 40% of the DWP’s own staff are likely to be affected by that in-work conditionality approach. I know that various hon. Members have asked the DWP for answers on whether it will offer those staff the extra hours they need to avoid being sanctioned and having their tax credits and universal credit cut. Will the Minister comment on that now?

[Priti Patel]

We have been very clear that universal credit is there to secure employment opportunities and in-work progression for everyone who is on it. I come back to the wider support universal credit provides for families, which has been touched on. Parents on universal credit can claim back 85% of their childcare costs when they move into work, compared with 70% under legacy benefits. This is a significant change and means that a working family with two children can now receive up to £13,000 a year in childcare support under universal credit.

Interestingly enough, prior to the recent elections in Scotland, I met the Scottish Minister responsible for childcare to consider the development and uptake of the childcare policy in Scotland, which mirrors many of the programmes that we have in England. Affordable childcare is crucial for working families and I look forward to working with the new Government in Scotland to ensure that we can provide all possible relevant support.

Support for disabled children was also mentioned. We should all be clear—I recall debating these points in the Welfare Reform and Work Bill Committee—that there is clear recognition of the extra costs associated with disabilities. Universal credit will provide support for families with disabled children. Of course, the point about the disabled child addition is that it provides extra support for low-income families with a disabled child. We know that caring responsibilities are enormous for parents with disabled children, and we also know that those parents are less able to take up work. They therefore need greater support, and that is obviously what we are focused on.