Universal Credit

Greg Mulholland Excerpts

Wednesday 6th March 2013 Commons Chamber

[Greg Mulholland (Leeds North West) (LD)]

I am delighted to take part in this debate, although I feel like something of an interloper. As a member of the Select Committee on Work and Pensions in the previous Parliament, I hope that the Chair, the hon. Member for Aberdeen South (Dame Anne Begg), and her colleagues will be happy that I am contributing.

Let me start by paying tribute to the Committee and the Chair for the hugely important work they continue to do. It is quite right, because of the hugely significant nature of these reforms—we can all absolutely agree on that—that they should have the full and continual expert scrutiny of the Work and Pensions Committee, involving both the MPs and the staff. I am sure that that will continue to be the case, and that is quite right.

One of the big, thorny issues that we discussed on a number of occasions in the Committee in the previous Parliament was the over-complexity of the benefits system, which we said needed to be addressed. The report that we published in July 2007 said that

“our current benefits system is stunningly complicated…simplification should be a key priority for the DWP…We believe there are opportunities for merging some benefits, aligning the rules of eligibility and, where means-tests are necessary, the information required from claimants.”

Therefore, while praising the Committee for its scrutiny, the issues it has rightly raised and the points on which it has rightly challenged the Government, we can be in no doubt that, when scrutinising the Government in the past the Committee was clear that there had to be reform. Indeed, Ministers including the hon. Member for Bishop Auckland (Helen Goodman) told us during that Parliament that they agreed that there had to be some simplification and that the issue had to be addressed. I think that we all can, or should, agree on the principle. Of course, the devil is always in the detail and it is right that any reform—not just one as significant as this—is fully and properly scrutinised. That is why I welcome the information that the Government have provided in response to the Committee and the fact that we are having this debate and that the Committee will continue to push until its concerns are satisfied.

We have to remind ourselves that the reform is designed primarily to simplify the benefits system, which has to be done. The other big issue that we continually raised in the Committee during the previous Parliament is that we need to do more to incentivise people to work and to make work pay. There was cross-party agreement and, indeed, ministerial agreement from the previous Government that it was essential to ensure that benefits were sensibly targeted.

The hon. Member for Aberdeen South will remember our trip to the university of York, where we sat through a number of interesting and detailed presentations. We looked at mind-bogglingly complicated graphs of the current benefits system and the tapering. We were told by academics who were more expert on this than we could ever be that, without significant change and proper tapering, the cliff edge would continue and too many people who want to work hard would find that it did not make sense for them to do so when they could earn similar amounts from benefits, which is a choice that they do not want to have to make. That is the thrust of what the Government are addressing.

It is also important to say that this is not a cost-cutting measure. As the hon. Member for South Down (Ms Ritchie) has said, it will not save money for the Department for Work and Pensions, but it is not designed to do so. The Government estimate that it will cost £2 billion more to ensure not only that universal credit supports the people who need support—which is, of course, the primary purpose of any benefits system—but that it has smooth and transparent incentives to work. It will, however, lead to longer-term savings for the taxpayer, because it will make work more financially beneficial. That will also benefit the Treasury, because those people will then pay their taxes and be part of society by contributing in the way that they would wish.

The Committee has been right to challenge the Government on the issue of those who will gain more and those who will receive less as a result of universal credit. Ministers have made it clear that they believe that 3 million families will be better off and that 350,000 children and 500,000 working-age adults will be taken out of poverty, while acknowledging that 1.4 million people would see a drop in income were it not for the transitional protection, which is why that protection is so important. The Institute for Fiscal Studies also estimates that 2.5 million people will be unaffected.

[Bob Stewart (Beckenham) (Con)]

Does the hon. Gentleman agree, however, that there will always be a system for looking after those people who actually need help with this benefit?

[Greg Mulholland]

Absolutely. During the previous Parliament, there was consensus on the Committee, in the House and, indeed, among Members on both Front Benches that we need to do more to ensure that the benefits system is targeted on those who need it most and that it makes financial sense for those who can and want to work—whether that be full or part time, as appropriate to their other commitments—to do so. No one is suggesting that that is an easy challenge—it certainly is not, as the Committee fully acknowledged during the previous Parliament—but it has to be taken on and I am delighted that the Government have chosen to do so. It is also crucial to ensure that lessons are learned from the pathfinders. I remember looking at some of the pilots in the previous Parliament. It is essential that, during the implementation stage, the Department always takes full heed of the lessons and then makes changes as appropriate.

I want to comment briefly on a few of the issues that the Committee has rightly focused on. We can all agree that it is essential that universal credit works for everybody—for all claimants, not just the majority. It would not be a success if a group of people were significantly disadvantaged by its introduction, which is clearly not the Government’s intention.

On the move to a single monthly payment, I do not think anyone would disagree with the principle that it makes sense for people to have a sense of the money that they are given, to enable them to pay their rent and buy food, and that it is helpful for them to budget, as that will equip them to do so when they find work, as we all hope they will if they are able to do so. The Committee was right, however, to raise its concern that the switch to a monthly payment presents a significant challenge for people and families on a low income, and the Government have rightly responded to those concerns.

The biggest concern, which also involves landlords, relates to direct payments. That is not to say that the arrangements will be a terrible thing in all circumstances. The hon. Member for Aberdeen South will remember that we had exactly the same conversations when the local housing allowance was introduced. We must accept that, although the arrangements will work for some people, there must be a swift acknowledgement in cases where they are not working, before huge arrears can build up. Will the Minister clarify that such a safeguard will be put into the system, so that if things start going wrong, alternative arrangements can be made as swiftly as possible? Those could involve direct payments to the landlord, fortnightly payments or the splitting of payments. I will be interested to hear a reinforcement of the Government’s response to the Committee on that matter.

On the digital question, I believe that it is perfectly sensible to move to an online benefits system. That is happening throughout the welfare system and throughout many parts of the public sector, and it will result in a welcome reduction in costs, as long as we get the IT right. I am now a member of the Public Administration Committee, and this is a matter that the Committee will be looking at, following the publication of its critical report on the disaster of the NHS IT system.

People have rightly expressed concern, however, about those who do not have access to the internet. Many of those on low incomes might not be able to afford the necessary technology—a PC or a smartphone, for example—and older working people who are approaching pension age might never have had any experience of that technology. The Committee has therefore rightly pushed Ministers on this point, and alternative provision has been made, including contact by phone or in writing, or through a home visit. It is right that that should be spelled out so that we can be clear what will happen to those people who cannot reasonably access the internet. I urge the Minister to keep that matter under review, particularly when the pathfinders begin.

My final point relates to information. Any change in the benefit system will lead to anxiety for people even, ironically, when the changes could have a positive effect on them. It is therefore essential that they should be provided with clear, simple and adequate information, and signposted to where they can get advice. That also applies to MPs, because we have all had people asking us for advice on the effect that the measures will have, and we should have at our fingertips all the knowledge we need to advise them as the changes come in.

I pay tribute to my hon. Friend the Member for Eastbourne (Stephen Lloyd), who is also a member of the Select Committee. He regrets being unable to be here today for family reasons, but he is very much here in spirit. He was keen to take part in the debate. He also chairs the all-party parliamentary group on Citizens Advice. The citizens advice bureaux clearly have a role to play in this context, and he and the group have called on the Department for Work and Pensions to work with Citizens Advice to produce an information leaflet on universal credit. It is the ideal organisation to do that. I understand that, having written to the Secretary of State, my hon. Friend has now been told that the DWP will indeed pursue the matter with Citizens Advice. Perhaps the Minister could confirm that that is the case, because that would be a positive development.

In conclusion, this is a huge challenge, but one that would have to be confronted whichever Government were in power. This is a principle on which we can, I think, all agree, without necessarily having to agree on all the detail. I welcome it, but it is crucial to get it right between now and October. I urge the Government to keep the matter under review and then to be flexible if the pathfinders show that further changes are necessary to make it work in the way that, in the end, we all want—to support people who need it and to encourage people to get back into work when they are able to do so.