Universal Credit and Welfare Reform

Huw Irranca-Davies Excerpts

Tuesday 11th September 2012 Commons Chamber

[Huw Irranca-Davies (Ogmore) (Lab)]

I am pleased to speak in the debate and I applaud the many constructive contributions that have been made. I hope I can do as well. I start with one principle that I believe is agreed throughout the Chamber: that any reform now or in the future should be designed to enable people to get into work and to ensure that work pays. However, many concerns have been raised about whether the Government’s reforms will work or whether they will unravel rapidly and spectacularly.

I want to focus on the narrow subject of some of the most vulnerable people who might be badly affected by the reforms, if the reforms are not right and delivered correctly. I want to ensure that they are protected so that I do not meet in homes in my constituency, or in my office, people who say that they have been badly let down by unintended consequences. As the Minister knows, such people will visit his office, and they will be real people with real tragedies.

Baroness Tanni Grey-Thompson, who is far better versed with the group I want to talk about than I am, said:

“Cuts—such as those to support for most disabled children, and disabled adults living alone—are going to make the future considerably bleaker for many of the most disadvantaged households in Britain.”

I hope she is not right, but let me develop some of the detail behind that direct criticism of the reforms under discussion, which are to be rolled out progressively.

I welcome the fact that I am following the hon. Member for Eastbourne (Stephen Lloyd). He has a great background in representing some of the concerns we are discussing, and I am sure he would want the Minister to respond to them. The Minister can do so in his closing remarks, but I am happy for his officials to write to me.

Let us consider claimants who have children with disabilities. Under the proposals, the lower rate that will be available to families with disabled children is, if I understand correctly, significantly lower than the current disabled child element of child tax credit. I understand from Citizens Advice in my community, and others, that it has been estimated that the proposals will make such families worse off by up to £30 per week. If so, I guarantee that those families will wash up not only at citizens advice bureaux but in my constituency office, and I need to know what to say to them, where they can turn and how we can help them.

Another group is claimants who have disabilities. As hon. Members have regularly heard in their offices, disability premiums have always been a major aspect of the current means-tested support and recognise the many and complex additional costs faced by claimants with disabilities from things such as dietary requirements, extra heating for or adaptation of their homes, special aids, and so on. The disability premium is worth about £58 per week, and the disability element of the working tax credit about £54 a week. If claimants are to be significantly disadvantaged, I seek the Minister’s assurance that the proposed package will mitigate that. We are led to understand that around 500,000 fewer people will qualify for the new support when the disability living allowance is replaced by the personal independence payment. Once again, those people will turn up in the advice surgeries of MPs around the UK.

One final aspect concerns joint claimants who have limited capabilities. Under universal credit, couples who have limited capability at work, or in getting ready for work, will receive only one element that recognises restricted functions. Two individuals in a household might have much greater expenditure, but that is not reflected in the payment, which covers only one individual. Once again, those people will be coming to my surgery, unless the Minister can give a clear and categorical assurance that the proposals include some form of mitigation for those claimant groups, which include many tens of thousands of individuals.

I want to be broadly optimistic about the proposals and the principles behind them, but I share the worries that hon. Members have expressed—the proposals could unravel and there has been delay, and we do not know whether the planning and implementation will be effective and make them work. However, I want to ask the Minister specifically about the claimant groups who are at or below the poverty line, who could be the most significantly impacted by the changes. Have they been taken into account and is proper mitigation in place? If not, will he think again?

--- Later in debate ---

[The Minister of State, Department for Work and Pensions (Steve Webb)]

Almost 20 Members took part in the debate, and we are grateful to all of them. The high point was when my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) suggested that the contribution of my right hon. Friend the Secretary of State had been so definitive that we should have a parliamentary procedure under which the debate simply ceases and applause follows.

We have heard some powerful contributions. I was particularly struck by what Members had to say about the attitudes to work that they had encountered and the experiences of some of their constituents, as well as about the barriers to work. My hon. Friend the Member for Gloucester (Richard Graham) mentioned a letter he received before being elected to the House from someone who said she was demoralised by the fact that it did not pay to work. My hon. Friend said he came to this House wanting to do something about that, and he can be proud to be a part of a coalition that is doing something about it. My hon. Friend the Member for Battersea (Jane Ellison) mentioned the experience of a nurse who was heckled on her way to work for being stupid for going to work at all, because why would she bother? We have to end that situation. Although Opposition Front Benchers say they think work should always pay, they failed to deliver that when in office.

We must not lose sight of the big picture of this reform. We are bringing together separate strands into a single integrated system so that people do not have to go for their housing benefit to the council, for their jobseeker’s allowance to the DWP, and for their tax credits to HMRC. That will be good for tackling poverty, as it will lift many families and children out of poverty. It will also be good for tackling benefit take-up, because instead of having to claim several separate benefits, people will make a single claim. The suggestion that somehow the previous tax credits system was used as a model is absolutely extraordinary.

Someone said, “We all remember how terrible it was when people had their tax credits overpaid or under-claimed, or underpaid and claimed back.” That will come to an end because people will get the money when they need it. Under the real-time information, when their wage goes down, their tax credits—now their universal credit—will increase. They will not have to wait three years for a reassessment to claw back an underpayment; it will happen when they need the money. That is the way to tackle poverty.

[Huw Irranca-Davies]

The Government have justified their refusal to reveal the business case and, following an earlier intervention by my right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock), have declined to answer how many additional hours of work will be generated as a result of these changes. May I make things simpler? I ask the Minister: will these changes in the business case result in an increase in hours worked?

[Steve Webb]

I am grateful to the hon. Gentleman for bringing me to the issue of work incentives. It was central to this debate, so let me address the point directly. Two separate work incentives have been muddled together in this debate, including, I regret, by the right hon. Member for Birkenhead (Mr Field). The first is the incentive to take a job and the second is the incentive for those in work to work more hours. My right hon. Friend the Secretary of State, in introducing this debate, identified the fact that universal credit significantly improves the incentive to take a job. That is fundamental in order to move from a situation where, as we have heard, millions of people are in workless households where nobody is working. Of course the incentives for the second earner are important, but those for the first earner are even more important. We make no apology for prioritising them; we want far more households to have someone in work, which is why we have structured this as we have. We are therefore putting £2.5 billion extra per year, at a time when we are having to save on welfare, into in-work benefits, thereby improving the return to work. It must be the case that if we are spending more on in-work benefits, we are improving the incentive to work.