Universal Credit

Helen Goodman Excerpts

Wednesday 6th March 2013 Commons Chamber

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to have the opportunity to speak in this estimates day debate on universal credit, and to follow the hon. Member for Leeds North West (Greg Mulholland). I am grateful to my hon. Friend the Member for Aberdeen South (Dame Anne Begg) for ensuring that we had this debate, as it is a really significant one that affects millions of our fellow citizens.

I shall concentrate entirely on the issue of online applications, in respect of which I think the Government are heading for some really big problems. The Department for Work and Pensions has been far too sanguine about the extraordinarily ambitious target to get 80% of people online by 2017. Shelter, in looking at the issue, says that it is

“not convinced that half of our current face-to-face service users could fully transfer to our digital services”.

I am convinced that the DWP will not be able to transfer them in the way suggested by the Minister. Let me explain to him why I take this view.

First, according to Booz & Company, which did a report for Go ON UK, 10.8 million people in this country do not use the internet. The D-E social group has the lowest percentage of households accessing the internet, with more than 40% of them unable to do so. According to Go ON UK, the group brought together by the industry to promote online skills, more than 16 million people lack basic online skills. They might have used the internet at some point, but they do not know how to do all the different things necessary to fill out an online form.

It is often assumed that it is simply older people who do not use the internet. In an interesting study in the Journal of Direct, Data and Digital Marketing Practice, however, Dick Stroud has conducted a thorough and forensic exploration of who these people are. I urge the Minister and his officials to look at this opinion piece published last year. It shows that, of the digitally excluded, 1.2 million people are young and excluded—in their early 20s and earning less than £10,000 a year. Another excluded group of 1.5 million people who earn less than £20,000 range in age from about 25 to 50. Then we have a group of 2.2 million people in late middle age who are uncertain, but open to persuasion that going online would be a good idea. These are large numbers of people, and they are precisely the people who will be making applications for universal credit. The crossover between the digitally excluded and the universal credit applicant is absolutely huge.

Furthermore, the Minister should converse with his colleagues in the Department for Culture, Media and Sport. Ofcom has reported today that 10% of the population—2.6 million households—cannot access broadband speeds above 2 megabits per second, and those are mainly in the countryside. The picture of the digitally excluded shows not people scattered evenly throughout the community, but people concentrated in particular socio-economic groups and geographical areas.

[Dr Whiteford]

The hon. Lady is making a very astute point. Some of my constituents do not have access to the internet, and those who do so often end up paying significantly more for it because of their geographical position. However, it is low-income families, wherever they live, who find it hardest to justify an internet connection in their homes, and at a time when libraries are being closed in areas of all kinds, it is increasingly difficult for those with low incomes to go online.

[Helen Goodman]

The hon. Lady echoes precisely my own thoughts. I urge the Minister to make a plan, and to look at the geography. He might then begin to be in a position to make a more accurate assessment of the problems that the Department will face, and to develop a more effective strategy for dealing with them than the Government seem to have at present.

Of course there are questions to be asked about whether the Government’s IT system will be up to scratch—we all remember the problems that arose with child support and tax credits—but the question in this instance relates to the capabilities of the population, and that is the other issue that the Government are completely ignoring. The last Labour Government spent more than £400 million on digital inclusion. Between 1999 and 2003, £396 million from the capital modernisation fund and the New Opportunities Fund was spent on enabling people to go online, and in our latter years in government we invested £30 million over three years in UK online centres, which enabled a further 1 million people to do so.

If 5 million or 10 million more people need to be enabled to go online, the Government ought to consider investing serious resources in a digital inclusion programme, but the DWP is spending £1.5 million, as are the Department for Business, Innovation and Skills and the NHS. There are 5 million or 10 million people whom we need to help, and we have a budget of £4 million—just for 2013-14; it does not cover later years. Given the rate at which this seems to work, that will help about 125,000 people. The level of resources and the extent of the focus on the problem are not remotely commensurate with the scale of it.

I am glad that today is an estimates day, because I want to ask the Minister about the motion on the Order Paper. How much of the £507 million “for current purposes” will be spent on extra support in jobcentres to help people who are not skilled, and how much of the £97.5 million “for capital purposes” will be spent on the computers that will be in the jobcentres to help people who do not have computers at home? I have tabled a number of written questions to DWP Ministers, but I have not had any clear answers. The Minister of State, Department for Work and Pensions, the hon. Member for Fareham (Mr Hoban), merely said that his

“survey of working age benefit and tax credit recipients found that 78% already use the internet.”—[Official Report, 29 November 2012; Vol. 554, c. 491W.]

There is clearly a mismatch between what the Minister is being told by his officials and what people in the technology sector are saying. I have also written to the Minister’s noble Friend Lord Freud asking about the Government’s strategy, but I have still not received a reply.

If we are to help those who are digitally excluded, we need to think about why they are excluded. Is it because, like 2.5 million households in the countryside, they cannot get broadband, or is because they are “self-excluding”? According to the surveys that have been conducted, about 50% of people say that they are not interested. Perhaps Ministers think that their “digital by default” programme will enable them to make people interested and to motivate them. I can hardly think of a worse learning environment than someone facing the stressful situation of their family’s income depending on whether they succeed or fail in the test. I can hardly conceive of a worse way of motivating people. People learn best when they are relaxed and are enjoying themselves in a friendly, warm environment. That is not what Ministers are doing. They are going to put extremely vulnerable people under this pressure.

Another issue is cost. Some 25% of people who do not use the internet say that is because of the cost. Half of them say it is because of the cost of access. As the hon. Member for Banff and Buchan (Dr Whiteford) said, an internet connection costs between £3 and £5 a week. People on jobseeker’s allowance and employment and support allowance will be receiving a benefit of £71.70, and after the bedroom tax they will be left with £23 a week; we know that because it is what our constituents tell us. The Minister is looking puzzled. That is what they will be left with once the cost of all their utilities has been stripped out. Based on what my constituents tell me utilities cost them, I have taken away £20 for heating, £10 for electricity, £6 for water rates and £4 for bus fare. That leaves them with £23. I have not included any money for a mobile phone or telephone connection or for a television licence. They also have to pay for things like washing-up liquid, loo paper and perhaps a pair of shoes once a year—a pair of trainers from Sport Direct.

These people will be forced to live on tiny amounts of money once the bedroom tax is introduced. If someone’s food budget is £18 a week, which is what my constituents are facing, I submit they will not want to spend £5 a week on an internet connection, as that would not be compatible with their way of life. There is also the cost of equipment. The cheapest equipment people can get costs £150. Ministers are therefore setting up a lot of people to fail. This is not a reasonable way to treat them.

I urge the Minister to look again at this. Exactly where across the country does he think the problem is going to arise? Will he publish a strategy? What kit is he putting into jobcentres? How much time is he expecting his staff to be offering people to support them? As Members have made clear, filling in one of these forms will take at least half an hour. In my constituency about 3,000 people will be eligible for universal credit. Although it is being phased in so that things will not happen all at once, if we say half of them can manage on the new system but the other half cannot, we will end up in a couple of years with 1,500 people needing help. If the Minister has put three computers into the local jobcentre and they are all operating for 50 hours a week, which would be an amazing feat, it would take 10 weeks for all those people to get their online applications made. The resources Ministers seem to be putting into this are not commensurate with the number of people who are going to need help.

I urge the Minister to look again at this. The Government are heading for a very significant train crash and, unfortunately, those on board the train will be the most vulnerable people in the community.

--- Later in debate ---

[Sheila Gilmore]

My hon. Friend raises another important aspect. People have run up large bank charges, often inadvertently, on a very limited income. They might decide not to use the bank account any longer because that is easier, or the account may even be suspended.

Many warm words have been spoken about credit unions, but if we are honest about it, in most parts of the UK—the situation might be slightly different in Northern Ireland—credit unions are pretty small and cover only a relatively small part of the population. If we seriously wanted to increase their use, we would have to fund that properly and give them some ability to expand to the extent required. I would be more than happy to direct constituents in that sort of difficulty to a credit union, but I know that the credit union serving the local area currently has very limited capacity to expand. We have to think about that extremely seriously.

Another question considered today was that of the direct payment of rent. There are six demonstration projects, and indeed a report was published some time ago, but it was what the researchers called a baseline project report. In other words, it effectively looked only at people’s attitudes and capacities before the project got going; it proves nothing about whether it is working. Further data published by the DWP in December 2012 showed that in four months 8% of rent had not been collected. At that stage, 316 tenants had already been switched back to direct payment to the landlord, and the range of collections was actually greater than the 92% would suggest. In one project in an Edinburgh housing association, 63 of the 1,832 tenants were switched back to direct payments in the first four months, which I think is a substantial portion in a relatively short period.

It also appears—this will have to come out in the research very clearly—that some of the pilots have excluded some of the people most likely to fail. The pilot in Oxford apparently excluded those considered to be vulnerable, and the one in Wakefield excluded those who did not already have a bank account, so some of the difficult cases have not been included. That is fair enough in a pilot, but those cases must be taken into account before it can be claimed that all will be fine when this is rolled out more fully.

Members have spoken at length about the “digital by default” approach. I am not a luddite. I think that moving towards online claiming, wherever possible, is a good idea. In fact, when I was the convenor of housing on City of Edinburgh council we started a choice-based lettings system. It was possible to apply through a newspaper, people could fill in a form in the more traditional way, or they could apply online. Some people, including tenants’ groups, told us that we could not do it online because people would not be able to access it. We replied that we were giving people the choice. The online take-up was actually higher than many people had feared. Some of them will be getting help to do that, and that is the distinction we have to see.

There is a problem with the top-line figure, which is constantly quoted, of 78% for the proportion of claimants who already use the internet. It is drawn from research done for the DWP. It revealed that 78% have used the internet, but only 48% said they used it everyday, and that includes people in work, on tax credits and right across the whole spectrum. When we break the figures down, we see, for example, that 60% of people who are in receipt of incapacity benefit said that they had used the internet, but only 31% used it every day. There are some important distinctions within these groups.

If the new system frees up more adviser time, that can only be a good thing, but we need to know that that is really going to happen and where it is going to happen. The current situation appears to be quite stressed already. I have been told, and claimants’ experiences tend to back this up, that in Jobcentre Plus in my city people barely get four minutes with an employment adviser. Time is very stretched as it is.

[Helen Goodman]

Does my hon. Friend agree that another problem is that the voluntary sector advice agencies are also suffering from a shrinkage of resources? For example, the citizens advice bureau in Spennymoor in my constituency has only a third of the level of resources that it had two years ago.

[Sheila Gilmore]

There is undoubtedly a reduction in resources. Many of the advice agencies that I have contact with are having to tell people that they cannot get an appointment for three weeks, or even four.

--- Later in debate ---

[Mr Hoban]

Indeed, but we also need to triage people so that they can get to the person with the right expertise and ensure that we focus our resources on the more difficult and challenging enquiries, which requires some triage through the telephone system.

[Helen Goodman]

Will the Minister give way?

[Mr Hoban]

I have about 15 minutes left and am keen to deal with some of the other points that have been raised.

On advice and support, the advice sector is key to ensuring that we deliver universal credit effectively. We work very closely with the stakeholder organisations to ensure that their expertise is utilised. This is a moving picture and several things have happened since the Government published their response to the Committee’s report. On 11 February, we published the local support services framework, which addresses what support UC claimants need, including those with complex needs, and how we will work with the third sector and local authorities to provide that support in the most effective way.

At the heart of the framework is a partnership approach, which emphasises the need for close working between DWP, local authority managers and service providers such as social landlords and charities to agree on the services that will be needed at a local level. By encouraging close partnership-working between agencies, we will provide a more joined-up, holistic service for claimants with complex needs and a single claimant journey towards greater independence and, wherever appropriate, work readiness for claimants.

The hon. Member for Stretford and Urmston (Kate Green) asked about access. We have not decided yet whether there should be specialist advice line for welfare rights advisers, but we will try to bring together all benefits guidance in one place—I think it is a legitimate criticism to say that it has been fragmented in the past—and provide a much more simplified resource for relevant information. I hope that will make life easier for advisers in the third sector. I take on board the hon. Lady’s helpful point.

A number of hon. Members raised the issue of monthly payments, including the Chair of the Committee and my hon. Friend the Member for Amber Valley (Nigel Mills). Universal credit is designed to reflect a world where 75% of employees are paid monthly. Paying universal credit monthly will not only reflect patterns that people who fall out of work are used to, but help smooth the transition into work and encourage claimants to take personal responsibility for their finances. For the first time, we will be able to identify those claimants who struggle to manage on a monthly salary, and will provide support to help them develop the necessary money management skills to remove barriers that prevent some of them from moving into work.

We recognise that a move to a single monthly household payment is a significant change to the way in which many benefits are currently paid and that some claimants will require support to help them manage that change. Money advice will be offered to all claimants when they make a claim, and given to those who have a clear need for it. There will be different levels and types of money advice, based on need. Some claimants will be signposted toward an online service, some might be offered a single session over the phone, and others might be offered an intensive face-to-face session with follow-up calls. We also recognise that some clients might need money advice for only a short period, while others will need it for longer. We are trying to create a service that can be tailored to the needs of individuals, rather than a one-size-fits-all service.

On 11 February, we published guidance giving details of the factors that advisers should consider when discussing alternative payments with claimants. Those factors include drug and alcohol dependency. For most claimants, alternative payment arrangements will be time limited, and offered alongside further budgeting support and help to move towards managing a standard monthly payment. I mentioned that drug and alcohol issues were one of the factors that should be borne in mind. Others include learning difficulties, mental health conditions, those in temporary or supported accommodation, perhaps including people who are homeless, those who have severe debt problems and those who are the victims of domestic violence. So a range of factors will be taken into account to determine whether a monthly payment should be made, or whether an alternative, more frequent payment would be in the claimant’s interest.

My hon. Friend the Member for Enfield North (Nick de Bois) made the point that this is all about boosting aspiration. It is about enabling people to manage their finances and to get into work, and we need to ensure that we have a system that meets mainstream needs but also supports the needs of more complex cases, rather than a scheme that is designed entirely around the needs of the exceptions. It is important to get the balance right.