Universal Credit

Heidi Allen Excerpts

Wednesday 17th October 2018 Commons Chamber

[Ms McVey]

I will give way one final time.

[Heidi Allen (South Cambridgeshire) (Con)]

I want to express the view of Government Back Benchers on the motion. We believe genuinely that the Secretary of State is listening to what needs to change with universal credit, which makes a mockery of the motion, and not a single one of us, myself included, will vote for it.

[Ms McVey]

I thank my hon. Friend for those kind words. She has fought tirelessly to make sure that universal credit is the best system possible. Like all our party’s Back Benchers, she is not scaremongering but wants to help people into work and make sure that work pays.

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[Mr Harper]

We do not have very much time to speak. I am afraid the SNP Front Bencher took up a huge amount of time, so I am not going to take any more interventions from the SNP. He spoke for longer than the official Opposition.

We have reduced the effective tax rate for people on benefits from up to 90% to 63%. It was 65% to start off with and we were able to reduce that.

The second important point is that for many people on benefits who had hours caps, jobs had to be designed not around the needs of businesses or individuals, but around the needs of the benefit system. My experience when I was a Minister in the Department for Work and Pensions was of meeting businesses that designed jobs around the needs of their business. However, when they took on a fantastic employee who did a great job and then wanted to increase their hours and offer that person increased opportunities to earn a living, that person had to say, “I’m terribly sorry. I can’t take that promotion or those hours because it will put at risk my benefits and I will not be able to guarantee a roof over our head for my children.” That has changed and that is a radical improvement.

[Heidi Allen]

For the record, I was one of those employers, and I got very frustrated that I could not give more hours to people working for me. On the taper rate, the situation is better than it was. Given the choice, I would restore the taper rate to 50%, where it was originally designed to be. Does my right hon. Friend agree that if we are going to have to choose wisely where to spend money, we should pump money into work allowances for those claimants most adversely affected? That is where we should focus money on in this Budget.

[Mr Harper]

I agree with my hon. Friend that if the Chancellor is able to find some money—I always think it is very good to not try to write the Chancellor’s Budget in advance—the work allowances are an area to prioritise. I know that that is what my right hon. Friend the Member for Chingford and Woodford Green thinks, too. I am sure the Chancellor will have heard the call in the letter that he wrote and in the debate today from my hon. Friend. Getting rid of the hours caps is really important. It means that jobs can be better focused on individuals and that we give people the opportunity to get into work, progress in work, and be able to earn for their families.

The final point I want to make in the one and a half minutes I have left—I will not take any more interventions, because it takes time away from other Members—is on the experience of constituents. I still get constituents writing to me about universal credit—of course I do. But in the past year, since we rolled out universal credit in my constituency, I get about half the number I once did. I now get about half the number of problems that I used to get with the legacy benefit system.

I also want to take this opportunity—I hope the Secretary of State can take this back to the Department—to say that of course when one is rolling out a benefit system to millions of people there will be errors, but the experience of my constituency staff is that when we raise those issues with the Department it looks at them properly and we get considered, detailed responses to solve them for my constituents. The members of staff in the Department are very focused on doing their best for our constituents. I certainly had the experience—I have heard the Minister of State say this as well—from when I was in the Department of frontline staff saying that the introduction of universal credit was the first time they felt they could do what they came to work at the Department for, which is to help constituents get into work, earn more money and be able to provide for their families. That is a fantastic thing and I urge the Secretary of State to continue to roll out the benefit in a careful way.

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[Gordon Henderson]

Yes, that is an important factor. I also point out that Opposition Members often quote concerns raised by citizens advice bureaux about the impact of UC on local people. Well, I visited my local citizens advice bureaux and suggested that they work closely with my office to identify people with a problem, so that they could be helped. I did the same thing with a local church group that contacted me expressing concerns about UC. In addition, I used social media to ask people to contact me if they were facing difficulties because of UC, or if they knew of somebody facing difficulties. I have had only a handful of people referred to me since we went live in January and all the problems raised were resolved quickly by my staff.

The Opposition have also made much of the use of food banks, and I want to touch on that issue. My first experience of food banks in my constituency was when our local steelworks closed down and some workers were left without any money to buy food for their families. There was a long delay in getting those people the financial help that they needed and to which they were entitled. That delay did not arise under UC, but under the legacy benefit system. We hear repeated claims from Opposition Members that the transition to UC has forced more people to use food banks, so to check their claims, I went to visit a food bank in my constituency last week to find out for myself. [Interruption.] The volunteers who run that food bank are wonderful people for whom I have the utmost respect, as are the volunteers in the other food banks in my constituency.

[Heidi Allen]

I hope that my friends in the Opposition will forgive me for saying this, but everybody in the Chamber genuinely wants to get UC right, and I would rather that Opposition Members did not belittle my hon. Friend, who is genuinely trying to do his best to find out what is happening in his constituency.

[Gordon Henderson]

As my hon. Friend will understand, the claim is being made that some people who use those food banks were forced to do so because of the difficulties faced when claiming UC. When I pressed them about those difficulties, they said that one was the requirement for claims to be made online, which was also raised by the shadow Secretary of State. Some people claimed that they either were not computer literate or did not have access to a computer.

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[Stephen Timms]

She was not told about the availability of an advance payment. They are now being better publicised than when she made her claim, but the problem with advance payments is that people are being plunged into debt right at the start of their claim. For many, it is impossible to get out of debt once the system has forced them on to that slope. The result is that they have to go to food banks. We know that food bank demand rockets when universal credit comes in, because people get behind with their rent and other debts mount. I say to Conservative Members—many of them are fully aware of this—that this is not the way to treat our fellow citizens. Universal credit must be changed to stop this happening.

[Heidi Allen]

I appreciate the right hon. Gentleman giving way, not least because I might run out of time and not be able to say all that I want to say in my speech, including suggesting that it might be a wiser idea to make the advance payment into a first payment. It could be a bit like when people who do not pay their last month’s rent do not get their deposit back. We would look to take something back if anything was due, right at the end of the claim. Does the right hon. Gentleman agree that we should turn the advance payment on its head so that it is no longer a loan that we need to take back?

[Stephen Timms]

The hon. Lady makes an interesting suggestion, and I hope that her Front-Bench colleagues will listen to it. We certainly need urgent change on this point.

Ministers have, perhaps understandably, developed a tin ear to the voices that they should have been listening to over the past eight years, as the warnings about what they were getting into were being sounded. They have not been listening to those warnings, but I hope that they are at least listening to the Residential Landlords Association. They might have heard Paul Cunningham, the chair of Great Yarmouth Landlords Association, on the radio last week, as I did. He said that the majority of landlords in Great Yarmouth were now unwilling to let property to universal credit claimants because they inevitably got into arrears with their rent. He said:

“It is a social experiment that’s gone wrong”.

Of the Department for Work and Pensions, he said:

“They remain in denial about the system”.

His concluding point was that

“it doesn’t make business sense to let a property to a tenant who has no idea of when their claim is going to be processed or how much money they are going to get, and who will invariably end up in arrears”.

That is the reality of the experience of private landlords, let alone the organisations representing claimants that have been making submissions to the Government.

Among the many representations that the Government have received about managed migration, they will have seen the report prepared by the Resolution Foundation, and I hope that they have looked at it carefully. A lot of the submissions expressed deep foreboding about where we are heading with the managed migration programme. The Resolution Foundation made the following recommendation, which I commend to Ministers:

“The managed migration should only begin when the DWP has shown service levels meet a standard agreed with external experts including SSAC”—

the Social Security Advisory Committee—

“and the Work and Pensions Committee. We suggest this should be that 90 per cent of new claims are paid in full and on time”.

The recommendation—an excellent one—is that managed migration should not commence until that level of service can be achieved, and I hope that the Minister will be able to respond to that when he winds up. I commend that idea to him.

It is clear that we are heading into very difficult territory if this goes ahead on the current basis, as is still likely. The Conservative party has been warned about what happens to parties when they go ahead with such projects, given the prospects for universal credit. There is now, however, a chance—there is a moment here—for Ministers to fix these problems. They could take the necessary action; the Chancellor could do so in the Budget on Monday week. I urge them to stop the roll-out until these problems are fixed and not to press ahead in the way that is being proposed. Universal credit was a perfectly sensible idea. Unfortunately, its implementation has been very badly handled. The problems went right back to the start, when the July 2010 Green Paper stated:

“The IT changes that would be necessary to deliver”—

universal credit—

“would not constitute a major IT project.”

How wrong that was, sadly.

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[Heidi Allen (South Cambridgeshire) (Con)]

I am pleased to speak in this vital debate, not only because when universal credit is rolled out it will affect millions of lives, but because two significant parliamentary events are coming soon: the Budget and the regulations on managed migration.

I have been a member of the Work and Pensions Committee since 2015 and I have seen the Government do the right thing time and again. We halted the planned cuts to tax credits in 2015, we reduced the taper rate from 65% to 63% in 2016, and last year we invested a further £1.5 billion to reduce the six-week waiting period to five weeks and provide two weeks of extra housing benefit run-on for people who move on to UC. We know that when presented with facts, the Government will act, so that is what I shall do today.

I wish to talk about how we can improve universal credit. Let me start with the existing system. The awarding of a national contract to Citizens Advice will transform the experience of claimants struggling to get on to the system for the first time, but it still will not fix the risk of debt faced by those who cannot wait five weeks for their first payment and who subsequently struggle on reduced payments when they are paying back their advance loan. If press rumours that the pay-back rate will be reduced from 40% to 30% are true, that is welcome, but for me that does not go far enough. Does the fact that we are paying advances to 60% of claimants not tell us that people cannot wait for five weeks, so the system design is flawed? As we are paying out taxpayers’ money at the start, let us give them better value for money by making that first payment the actual payment itself, not an advance loan. If our estimation was wrong, we can readjust slightly at the end of the month and claw back any slight overpayment at the end, when the claimant’s life is more settled and their debts are under control. I believe that that would tackle the majority of debt and food bank-related cases that we hear about. Let’s just do it.

As we have heard today multiple times, we need to make sure that universal credit can handle occasions when there are two pay cheques in a long month and ensure that that does not disproportionally affect the following month’s benefit. We should support the Scottish Government trial to see whether split payments give greater support to sufferers of domestic violence, and we need to look again at how universal credit works for self-employed people.

[Dr Sarah Wollaston (Totnes) (Con)]

Totnes has a vibrant arts sector. My hon. Friend will know that many self-employed artists take longer to establish themselves as a business, and there may be great variation, month to month, in what they are paid. In the light of her detailed work, does my hon. Friend have any suggestions about how we can improve the situation for self-employed artists?

[Heidi Allen]

My hon. Friend is absolutely right: it is a fact that universal credit was not built for self-employed people, and it shows. The monthly assessments do not work and the minimum income floor needs to be looked at again because it typically takes more than a year for people’s businesses to settle down.

To make the existing system really fly, I suspect that we need a boost to IT and admin man and womanpower behind the scenes, because let us make no mistake: universal credit is not yet fully automated. Claiming for childcare costs is a prime example of the manual work that is still being done. That brings me on to how we move legacy claimants across and the regulations that we have still to vote for—in November, I suspect. I am pleased that migration will start a lot later than originally planned, but I and many others still have concerns about the regulations. As a Government, we are choosing, for all the right reasons, to move people—that is people—across to a new system. I fail to see why that should be the complete and utter responsibility of those claimants. I have led on IT transformation projects in business and it would be unheard of for there not to be some kind of automated population of data from the old system to the new. We need to look really seriously into doing that, because it would save us hardship in the long run. Let us not forget that a third of migrated claimants are on ESA—the most vulnerable in society who have some kind of illness or disability—and we should look after them and not let them drop off the system. The population of data should be automatic and there should be no break in those people’s payments at all.

Finally, when people arrive safe and sound on universal credit, the work allowances need to be what they should have been prior to 2015. How in this fair Great Britain that we call home can we have two families in identical circumstances living next to each other, but one has been protected across through migration and their next-door neighbours are £2,500 worse off a year? That is not Great Britain.