Universal Credit
Debate between Geraint Davies and Eilidh Whiteford(7 years, 7 months ago)
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Geraint Davies (in the Chair)
The debate will go on until 4.22 pm. I call Dr Whiteford.
Dr Whiteford
Usually people have exhausted their savings or redundancy money before they claim benefits, but if someone starts a new job, it is normal to be paid at the end of the week or month in which they start. The Government have said consistently that they want universal credit to mimic the world of work, but in that respect it really does not, and they need to look urgently at waiting times.
We all understand that processing a claim will take some days, but the monthly payment and discounted first seven days slows down the process unnecessarily and leaves people in considerable hardship. In reality, many claimants are having to wait a lot longer than six weeks. Eight to 12 weeks is more typical in some full service areas, and often longer. That is just not okay, and we have heard today about how those problems are not just abstract. I know from previous discussions on the subject that people have lost their homes. Many people on universal credit will be in work already so may have some other source of income, but a significant minority of new claimants will be sick and disabled people, assessed as unfit for work, and people who have just lost a job. The advance payments available are simply inadequate and are driving people into food banks, into debt and into trouble with their landlords. The bottom line is that the system is failing. It is in chaos.
Rent arrears are possibly the most far-reaching adverse impact of the full service roll-out. The Highland Council alone has seen rent arrears soar by £1 million, which is entirely and solely attributable to the roll-out of universal credit. My concern is that that is just the tip of the iceberg. We can get accurate figures of the scale and extent of the problem from local authorities, but the impact on other social landlords is likely to be profound. I know that housing associations in Scotland have warned that increases in arrears damage their financial stability, hitting their ability to invest in existing properties and build new ones. Private sector tenants and landlords face significant problems too, given that landlords may be servicing mortgages and may not have the level of solvency needed to wait several months for unpaid rent. We are already witnessing evictions. Just as worrying, we are already seeing evidence that some landlords are simply refusing to consider universal credit tenants.
Evictions and homelessness cause untold upheaval and misery for all involved and have a huge impact on other public services. The homelessness charity Crisis reports that 89% of English local authorities fear that the roll-out of universal credit will exacerbate homelessness. That situation is avoidable. We do not need to go down that road. The Government need to get a grip.
The Government have offered the excuse that the sharp increase we have seen in arrears appears to fall over time, several months down the line, but, frankly, that obfuscates the scale and extent of the increase in arrears. It also obscures the debt and hardship that those tenants, on desperately low incomes, are enduring in order to pay off a level of arrears that they would never have incurred under the previous system. It is yet another way in which the universal credit system fails to mimic the world of work, where most landlords require rent to be paid upfront a month in advance and, certainly in the private sector, expect sizeable deposits. Once again, the systemic pressures of the new system are being borne by people on marginal incomes—those with the fewest assets and means, working in the lowest paid jobs, recently unemployed or unable to work because of ill health or disability.
The other major breakdown in the system is in relation to the online accounts and problems with call handling on the telephone helpline. In many parts of rural Scotland, digital connectivity is well behind that in urban areas, notwithstanding significant recent progress. In my own constituency, 25% of people do not have access to the internet. It also remains substantially more expensive than in urban areas, and because of that, there are significant numbers of people with limited digital skills and experience who rely heavily on public access terminals.
My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) highlighted the high costs and time involved in travelling from rural areas to a diminishing number of jobcentres. I do not think a 200-mile round trip is acceptable. To put that trip in perspective, it would be like asking somebody here in central London to travel to Nottingham or Stoke-on-Trent for a DWP appointment. I do not think that is realistic.
My hon. Friend also highlighted a litany of problems with the telephone helpline. If someone calling from a mobile phone has to wait half an hour on the line, they could spend as much as a third of their weekly income on food, heating and essentials. Twenty quid may not sound like a king’s ransom to higher rate taxpayers, but for someone on a very low income, it is an enormous amount of money. Even if the Government’s assertion that waiting times are only eight or nine minutes was backed up by the documented experience from MPs’ offices and citizens advice bureaux, that is still a fiver. Proportionately, that is a lot of money for someone in receipt of £73 a week who is struggling to pay rent, heat their home and buy food.
Universal credit should have been quite easy to roll out in the highlands, in that there is a relatively buoyant labour market and universal credit should, in theory, be better suited to managing patterns of seasonal employment, which is widespread in the region. But it is proving to be a disaster, not just there but, as we have heard today, across the UK.
My last point is this: leaving aside the catalogue of incompetence that has dogged universal credit from the start, the new benefit is turning the screws on low-income working families and is now unrecognisable from its original design. According to the Child Poverty Action Group, by 2020 families with children will be, on average, £960 pounds a year worse off than they would have been under the previous system. The effects are magnified for families where one parent is working full time and the other is working part time or is at home with the bairns. Parents of severely disabled children are losing out. Those who will be most disadvantaged are single parents working full time in low paid jobs, who will be, on average, £2,380 pounds worse off. That is almost £200 a month.
The idea that work always pays under universal credit is just nonsense. It is a massive cut in household income and it punishes people who are already working full time, doing everything they can to make ends meet. For some of those people, work will no longer pay, and they would be better off if they cut their hours. That is exactly the opposite of what universal credit was designed to do. The policy has been so filleted by successive austerity cuts that it is no longer able to deliver the improvements it promised. Instead, it is set to drive up child poverty.
As we have heard today, the full service roll-out of universal credit is proving to be a disaster. It is causing chaos for landlords, housing associations and local authorities. It is causing turmoil, upheaval and real hardship in the lives of claimants who are entitled to support. We have had no adequate assurances from the Government that the systemic failures are being addressed. In those circumstances, I believe that we need to call a halt to the universal credit roll-out and go back to the drawing board, because at the moment it is an unmitigated mess and ordinary people are paying the price.
Housing Benefit (Under-occupancy Penalty)
Debate between Geraint Davies and Eilidh Whiteford(11 years, 8 months ago)
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Dr Whiteford
My hon. Friend’s legal expertise helps him to make a compelling point. Social landlords are aware that more people will be at risk of arrears and that they are being proactive in trying to prevent that from happening, but they are clear that their ability to provide affordable homes depends on their ability to collect rents from tenants. The real problem is that the under-occupancy penalty is unfair and unworkable. Instead of trying to mitigate its worst effects, we should concentrate on changing the underlying problems and abandoning the bedroom tax. In Scotland, we clearly have an opportunity to do that by bringing decision-making powers back to the Scottish Parliament.
Housing associations have historically been seen by lenders as relatively stable, and have been able to borrow money at competitive rates. Mary Taylor, chief executive of the SFHA, has pointed out to Ministers that
“already it is proving harder for landlords to borrow from banks, whether to build or to fund major repair and retrofit programmes. And where they can borrow it is invariably at a higher cost than before, even though interest rates generally remain low and stable. According to Housing Associations, lenders are pointing to the lack of security of rental income arising from Welfare Reform as a key factor in these rising costs. Lenders have to assess risk—and they recognise the very real risks, even if the Government is stubbornly refusing to do so. I believe the Council of Mortgage Lenders raised these issues with the Government over a year ago, but we are still to see action.”
Geraint Davies (Swansea West) (Lab/Co-op)
Does the hon. Lady agree that many councils have rightly, historically and naturally built two and three-bedroom homes for families? If councils choose to evict people from that stock as families grow up, they will end up with a massive void. The choice will be between having not quite enough rent and having no rent, which is financially absurd.
Dr Whiteford
The hon. Gentleman makes a good point—some housing associations already contend with that problem. If they are to continue to invest in their existing properties and continue to build the new smaller properties that we need to meet our changing demographics, they need to be able to borrow, and to do so cheaply. Any increase to the costs of borrowing will have only an inflationary pressure on rents and service charges. That pressure falls back on the low-income households in the social rented sector, who can ill afford it. There is no doubt in my mind that the problems for social landlords, caused by the shortfalls in housing benefit for people affected by the under-occupancy penalty, will be further compounded by the end of direct payments under universal credit.