Universal Credit

Esther McVey Excerpts

Tuesday 13th March 2018 Commons Chamber

[The Secretary of State for Work and Pensions (Ms Esther McVey)]

As the hon. Member for Wirral West (Margaret Greenwood) is on the Opposition Front Bench, may I start by congratulating her on her promotion? I am sure that she would have liked to have got it in happier circumstances, but none the less I welcome her to her role. I hope that she does not fall victim to the bullying culture of the Leader of the Opposition’s office, as the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) has.

Well, well, well, what a strange old topsy-turvy world we find ourselves in. Measures so strongly fought for and won by claimants, MPs, stakeholders and charities only months ago are now being opposed by the Opposition. These changes were proposed by the most vocal defenders of benefits, and they are now being obstructed. We in the Chamber should not be giving the public misinformation, but unfortunately that is what has been happening so far.

Last month, stories emerged from Opposition Members—particularly the hon. Member for Ashton-under-Lyne (Angela Rayner)—that have been repeated today: namely, that our plans for entitlement to free school meals would deprive more than a million children. It took a “Channel 4 News” FactCheck to point out that no child who currently receives meals would lose their entitlement and that, in fact, some 50,000 more children would benefit under our proposals when compared with the previous system.

I understand that it is the nature of the Opposition to oppose, but the scaremongering and misinformation from the Opposition has surely reached a new low as today they seek to annul regulations that consist largely of changes that were introduced purely to support benefits claimants—changes that Opposition Members have themselves called for. All this after a recent intervention by the UK Statistics Authority, which made it clear that the claims made by Opposition Members about universal credit causing poverty, debt and eviction were not supported by the evidence.

Of course, the scale and nature of the change represented by universal credit means that scrutiny is inevitable and important, and I welcome that, but unsubstantiated and exaggerated claims about widespread problems caused by universal credit amount to nothing less than scaremongering. They cause claimants alarm and, in the worst cases, stop them getting the money that they are entitled to, yet we find ourselves here again, debating universal credit, with the same false alarms coming from the shadow Cabinet—only this time we are debating the very regulations that we have designed to address the legitimate concerns of Opposition Members and our stakeholders.

[Ruth George (High Peak) (Lab)]

The Secretary of State has said that claims should not be made when they are unsubstantiated. I have been asking parliamentary questions about the £50,000 increase that is in the consultation response, and I have received no facts about how the figure has been arrived at—none whatsoever. Will that be published, please?

[Ms McVey]

The numbers have been calculated and modelled by civil servants. These facts come from independent people and they can be relied on, unlike the facts that come from people who, as we have heard today, make it up as they go along.

[Maggie Throup (Erewash) (Con)]

Will my right hon. Friend dispel some of the myths and scaremongering that have been put out by the Opposition and reassure my constituency, where universal credit is being fully rolled out, that those already in receipt of free school meals will not lose that eligibility?

[Ms McVey]

My hon. Friend is correct, and I thank her for adding that comment. She is right that that protection is afforded. In addition, as we go forward, more people will benefit from the measure.

[Several hon. Members rose—]

[Ms McVey]

I will carry on for a bit, and then I will gladly take some more interventions.

We are not just debating these regulations today, but trying to save them from the Opposition, who would be happy to destroy this extra support for our benefit claimants. Perhaps I should remind the House of some of the changes that are in these regulations and what benefits they will bring to claimants. After all, the policy underpinning these regulations has been widely debated and supported both inside and outside this Chamber. The regulations abolishing waiting days will help many claimants by, on average, £160, while reducing the time taken to receive the first monthly payment. These regulations bring into effect the housing benefit transitional payment, which amounts to two weeks of housing benefit at the start of the claim. That is worth, on average, £233 towards helping claimants stay on top of their housing costs as they move into universal credit. These regulations increase the work allowances and are worth around £68 a year in further support for those who are striving to enter work.

[Neil Gray (Airdrie and Shotts) (SNP)]

The Secretary of State is attempting to provide a stout defence of the impact of universal credit. Why is it then that, only last month, her colleagues on Stirling Council proposed three years’ worth of mitigation against the impact of universal credit, worth more than half a million pounds?

[Ms McVey]

Actually, if the hon. Gentleman looks at what this Government introduced in the Budget, he will see that it was a package of support worth £1.5 billion for the country. What we are doing is supporting people as best we possibly can. Additionally, these regulations fund temporary accommodation through housing benefit, which has been widely called for and unanimously welcomed by local authorities.

These regulations follow on from a host of other changes that we have already implemented, including making our telephone lines Freephone numbers, extending the maximum repayment period for advances from six months to a year, increasing the maximum advance that claimants can receive to up to 100%, changing the guidance to ensure that, when private sector housing claimants come on to universal credit, we know whether their rent was previously paid directly to the landlord and can ensure that that continues.

[Clive Lewis (Norwich South) (Lab)]

Meaner even than the master in Oliver Twist’s workhouse, the Secretary of State seeks not just to stop the second helping, but to stop any meal at all. I ask her to come to Norfolk. If these changes go through, 12,500 children will be denied a hot midday meal. How does that square the circle in relation to making work pay? Please, can she tell us —anything?

[Ms McVey]

Unfortunately—I think that I was taught this as a child—when someone has totally lost the argument, they make up the facts, and that is what we are hearing from the Opposition. Although we have brought in all the requests that they wanted to support more people into work—I have just read out the list—they just scaremonger and make things up as they go along. I hope that it is clear to the whole House that these regulations will bring in real and tangible benefits for claimants and that, as promised, we are making the changes necessary to continue to deliver universal credit safely and securely, with all the necessary support that claimants need.

I want to be clear about another thing, too, because Members have stood up during past universal credit debates to recount stories of cases where their constituents have reported difficulties with universal credit. Where that has happened, we have immediately sought to address the concerns, because it is vital to us all that we get this right, so that we can deliver the most modern, forward-thinking, flexible benefit in the world, and that is what this Government are seeking to deliver. This benefit will be at the cutting edge of support throughout the world—that is what this Government are delivering.

[Stephen Timms (East Ham) (Lab)]

On problems with universal credit, the Secretary of State will, I think, recognise that the last thing that families earning a bit less than £7,400 a year will want is a pay rise, because if they get it, they will immediately lose their free school meals and be much worse off as a result. That is a very serious problem for work incentives, which used to be a big priority for her Department. Does she recognise that major problem?

[Ms McVey]

The right hon. Gentleman raises a fair point that I would like to address. By contrast, the other points that we have heard so far have been fabrication. He mentioned people earning £7,400. Actually, with universal credit, we are talking about people who will be bringing home somewhere between £18,000 to £24,000. He is quite right—[Interruption.] If Members will kindly let me finish this answer to the very pertinent question asked by the right hon. Gentleman, as this is now a personalised benefit where people will have their own work coaches, we will not seek to put someone in a less advantageous situation. Therefore, if people look at the money that is coming in and the extra support that is coming from school meals, they can see that we will not seek to do that to an individual. A work coach will be working with individuals to help them to progress in work, so that they are in a better situation.

[Chris Philp (Croydon South) (Con)]

On work incentives, can the Secretary of State confirm that there have been two studies—one in December 2015 and another in September 2017—both of which showed that people on universal credit were more likely to get back into work than those people on the predecessor benefits? Therefore, this is helping to get people back into work.

[Ms McVey]

My hon. Friend is quite correct. Further studies show that people on universal credit are much more likely to look for work than people on jobseeker’s allowance—86% of those on universal credit, compared to 34% of those on jobseeker’s allowance. Under the legacy benefits came things that I am sure we all remember, such as the 16-hour rule, which trapped people on benefits. That will not happen under universal credit because it pays people to work, every hour that they work.

[Mr Duncan Smith]

My right hon. Friend is doing a fantastic job. She has pointed out the absurdity of the Opposition’s position, whereby they will now vote against the changes that will benefit those who most need them. Alongside that, they are now voting for a policy that would deliver free schools meals to families earning £40,000 a year. Does not she think that the Opposition are for the few, not for the many?

[Ms McVey]

My right hon. Friend makes a very good point. Perhaps these are honest mistakes by the Opposition; I am not sure. Under universal credit, people can be in work and not in work. Perhaps the Opposition do not understand the complexities of this system, which is helping people into work and then to progress at work. As my right hon. Friend said, if we allowed free school meals in every family on universal credit, those families could include parents earning £40,000 a year. As has always been the case, we support people on free school meals from families who are either not in work or in low amounts of work.

[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. Again, can we listen to the Secretary of State? It is fine if she wants to take interventions and she has indicated that she will take some more, but I do think that hon. Members should be a bit calmer.

[Ms McVey]

I will give way to my hon. Friend the Member for Faversham and Mid Kent (Helen Whately).

[Helen Whately (Faversham and Mid Kent) (Con)]

Jobcentres in my constituency tell me with some passion that universal credit is really helping them to get more people into work. The Government have also listened to concerns about universal credit and are making improvements. Does it not baffle the Secretary of State and is it not bizarre that the Labour party is trying to block those improvements, when the Government are doing exactly the right thing?

[Ms McVey]

My hon. Friend is spot on, and the incredulity with which she says what the Opposition are stopping points out the ridiculousness of their position. Not only have we helped an extra 3.1 million people into work, but these regulations help the most vulnerable and will bring in an extra £1.5 billion of support.

[Several hon. Members rose—]

[Ms McVey]

I will carry on for a little bit more before taking more interventions from Opposition Members.

I turn to the Free School Lunches and Milk, and School and Early Years Finance (Amendments Relating to Universal Credit) (England) Regulations 2018. The Government have recently published their responses to two consultations on the earnings thresholds to receive free school meals under universal credit. The scope of these consultations includes entitlement to free school meals, the early years pupil premium and free early education provision for two-year-olds. The intention of these regulations is to replace the transitional criteria introduced in 2013. These transitional measures made all families on universal credit eligible for these entitlements—a move that was necessary so that no household should lose out during the early stages of the universal credit roll-out. Having fully considered all the responses to the consultation, the Department for Education laid these regulations before the House on 7 February to replace the temporary criteria with the new earnings threshold. This is what much of the debate has centred on so far. I hope that we have given clarity and the Opposition now understand why accepting these regulations would be so helpful to their constituents.

[Catherine West]

This change to benefits shows how untrusted the Government are on benefits. If they are trying to sell something good, they cannot, because they are so untrusted on benefits. If the system is so fantastic, why do 80% of people who come to see MPs get their benefits? Why should not the system just work? [Hon. Members: “What?”] Some 80% of appeals for universal credit—

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. May I help a little bit? Would hon. Members make short interventions? I want to ensure that all Members get in. The sooner we get this speech over, the sooner we can get to the Back Benchers.

[Ms McVey]

It would be helpful if hon. Members did not just make up statistics and facts as they went along, as we just heard from the hon. Lady. Hon. Members should listen to us regarding the support that we are now providing to claimants. As I said, it is a topsy-turvy world. There was a ding-dong when the Opposition were calling for the changes. Now that we are introducing the changes, we are back to another ding-dong and they do not want the changes—but never mind.

I turn to the regulations concerning national insurance contributions and childcare. These regulations align the tax and national insurance treatment of employer-supported childcare, where parents opt into the new tax-free childcare scheme. They remove the national insurance disregard to new entrants to the scheme, once the relevant day has been set. They are vital to ensure that the tax system operates fairly and consistently and that the Government can target their childcare support effectively.

For many parents, being able to afford good-quality childcare is essential for them to work and support their families. That is why we are replacing the childcare vouchers with tax-free childcare, which is a fairer and better-targeted system. Tax-free childcare is now open to all eligible parents, who can get up to £2,000 per child per year to help towards their childcare costs. More families will be able to access support through tax-free childcare because only about half of employed working parents can access vouchers, and self-employed parents were excluded from vouchers. Therefore, 1.5 million families are now eligible for tax-free childcare compared with about 600,000 families currently benefiting from vouchers.

[Mr Ivan Lewis (Bury South) (Ind)]

Will the Secretary of State clarify something she said in relation to people getting pay increases that then perversely lead to them being worse off? She appeared to say that she would instruct personal trainers to put that right financially. I can hear a shudder going around benefits offices up and down the country at the idea that she has unilaterally said that if any constituent of ours faces being worse off as a consequence of a pay rise, perversely, her personal trainers will compensate them for that loss.

[Ms McVey]

I thank the hon. Gentleman for that intervention, because it allows me to explain that universal credit works on a tailor-made basis, so that the claimant will always be in contact with their work coaches to work out what is better, how progression would be better and why they would be taking reasonable work because it makes them better off. I am not saying this unilaterally. I ask all Opposition Members please to go to their local jobcentre and meet the work coaches, who can then explain how the system works.

In 2013, the Government announced the introduction of tax-free childcare as the successor to childcare vouchers. The passing of the Children and Families Act 2014, which legislated for tax-free childcare, had cross-party support. Tax-free childcare is now fully rolled out, and the date for the closure of the voucher scheme to new entrants is April this year. This was set out in the 2016 Budget, giving two years’ notice. Parents receiving childcare vouchers can continue to use them while their current employer continues to offer the scheme.

[Mr Marcus Jones (Nuneaton) (Con)]

Is not the bottom line that under the previous tax credits system people got 75% of their childcare costs but under universal credit they get 85% of their childcare costs, and they can work all the hours that they want to?

[Ms McVey]

Universal credit is far more generous, as my hon. Friend points out. Up to 85% of childcare costs will be given to people who need it.

Under the childcare voucher scheme, the estimated cost to the Exchequer of forgone employers’ national insurance contributions is £220 million per year. This is paid to employers and voucher providers to administer the schemes, so it is not surprising that voucher providers are lobbying hard to keep the scheme open. However, we are focused on delivering a better childcare offer for working families. Tax-free childcare is simpler to administer for childcare providers, who will not have to deal with multiple voucher providers. These regulations will bring the national insurance contributions relief in line with the income tax treatment. They are an essential step in reforming Government childcare support to provide a fair and well-targeted system. Closing the childcare voucher scheme to new entrants will ensure that more Government support goes directly to parents and helps working families to reduce their childcare costs.

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

With the consultation that the Government are carrying out on abuse of women, does the Secretary of State recognise the threat of financial control and abuse posed to women by the single payment? Would she be willing to consider making individual payments of child tax credits to the mother, and so on, the norm? Charities have demonstrated that women who are being abused will not apply for exception because they feel they will come under physical abuse.

[Ms McVey]

The hon. Lady makes a good point, and that is why it is possible to split payments according to need. The devolved Administration in Scotland have the right to alter these rules and provide extra support, should they wish to, but it is safe to say that payments can now be split, and we have listened to those concerns.

We are also listening to colleagues in Northern Ireland, who have raised specific circumstances relating to certain public sector service employers, and have committed to ongoing engagement with them to look at these issues, as tax-free childcare continues to roll out to replace employer-supported childcare. We have seen the success of 30 hours’ free childcare for three and four-year-olds in England, so we are committed to working with the Northern Ireland parties to administer childcare support of that kind in Northern Ireland, in the absence of an Executive.

For the reasons I have set out, annulling these regulations would deprive families and their children of the important and positive support that this Government are determined to offer and would have a range of very negative effects, so I call upon the House to oppose the motions.