Universal Credit Work Allowance

James Cleverly Excerpts

Wednesday 6th January 2016 Commons Chamber

[Dr Whiteford]

They were certainly showing a fair bit of dynamism yesterday morning. I was really glad that I did not have to work with them. I partly agree with the hon. Gentleman. The insecurity of the modern labour market means that people move in and out of part-time work more often that they did in the past. It is important that we create a system that responds to that. My problem is that the Government are undermining their own process with their transitional arrangements, but I will say more about that in a second or two.

There are people all over my constituency—and in everybody’s constituency—who work extremely hard already in low-paid, tiring and not exactly pleasant jobs that are neither interesting nor glamorous. They are often doing that while they are juggling family responsibilities, looking after children or, increasingly, elderly and infirm relatives. For many of them, taking on extra hours depends on that work not just being available, but being available at a time when they have access to childcare. Let us face it, young children cannot get themselves out to school in the morning. They may not be able to walk there safely on their own. They cannot just be left unattended at home for several hours after school or get their own tea. Many working parents have to juggle work and family commitments. Indeed, one reason why so many women are trapped in low-paid, low-skilled jobs, even when they have high-level skills and qualifications, is that they are the primary carer in their household and they are trying to fit work around their family responsibilities. The Catch-22, of course, is that it is a lot easier to do that juggling if they are in a well-paid job.

I have a very serious question for the Government that echoes the question posed by my hon. Friend the Member for Glasgow South West. Many of those who work in low-paid jobs in Government Departments, including in the DWP, receive tax credits or universal credit. Will their employer offer them a few wee extra hours to compensate them for the loss of their work allowance? Will the DWP specifically—I hope that Ministers can answer this one—offer extra hours to its own staff who are set to lose out, or will it impose in-work conditionality on them instead? If the Government cannot or will not commit today to supporting their own staff, they have no business putting the onus on other employers to miraculously conjure up extra work for people.

[James Cleverly (Braintree) (Con)]

Will the hon. Lady give way?

[Dr Whiteford]

No—I have moved on, so I am going to keep making progress.

It is important that we understand that new claimants for universal credit will be significantly disadvantaged compared with those still claiming under the old tax credits regime. We have been told that there will be transitional protections for those being migrated from the old system to the new, but my understanding is that the transitional protections for existing claimants will evaporate if there is a significant change to their circumstances such as a new job, having a baby, or the breakdown of a relationship. The difference will be enormous. In the coming financial year, a one-earner couple with two children will take home nearly £800 a year more on the old tax credit system than they will if they have been moved on to universal credit. That is a huge disincentive to change one’s circumstances. People who are already on very tight budgets will be very reluctant to increase their hours or take a promotion if it might leave them worse off. Once again, this undermines work incentives, and it will make people reluctant to take promotion, change their hours, or move to a different employer. To come back to the point raised earlier, it will erode the dynamism of the system by which the Government have set such store today.

I think these disparities are going to cause real ill feeling in our communities. Co-workers who are doing the same job alongside each other, earning the same salary and living in similar family circumstances, could be receiving wildly differing levels of support. I do not know how the Government plan to sell that to people in low-paid work. I certainly would not want to have to try to justify it to my constituents; it is manifestly unfair. What is also deeply problematic is that some parts of the UK have been transitioning to universal credit before others, so there will inevitably be regional disparities in the areas where a higher proportion of claimants have been migrated. Why should people living in Hammersmith, Rugby, Inverness, Harrogate, Bath and Shotton—the areas where universal credit has been rolled out first—receive less support, on average, than those in the towns and cities that are last in the queue? The Government admit that at least 700,000 people will still be on the old system by the end of next year. That is a recipe for discontent among those who have served as the guinea pigs.

Cutting work allowances will not achieve the outcomes the Government claim. The way to reduce social security spending is to fix the economy—to create jobs and boost productivity. That reduces the need for spending on social security and raises tax receipts. We need to name the cuts to the work allowance as what they are—an assault on people in low-paid work as part of a failed, needless, ideologically driven austerity programme that has held back economic recovery and stifled productivity. The Government have made the wrong choice. They have a chance today to rethink these cuts, which will reduce work incentives and trap low-paid families in poverty. There is an alternative to austerity. Their short-sighted, counter-productive cutting of work allowances will hurt working people. I hope that the Conservative Members who expressed reservations about the tax credit proposals will understand that this cut will hit many of the same people in much the same way as they move on to universal credit, and that they will join us in the Lobby this afternoon.

--- Later in debate ---

[James Cleverly (Braintree) (Con)]

It must surely be a fact that Members in all parts of the House want to see more people in good jobs. This must be a central focus of any Government. There is a pragmatic economic argument for this, as well as a social and moral argument. Labour’s policies in this area were no doubt well intentioned, but proved to be expensive, bureaucratic and in some cases—too many cases—counterproductive.

The growth in job vacancies in the UK economy today is a reflection of the success of this Government’s policies and provides opportunities for people currently out of work and people who want a better job. Some 2 million more people are now in work, which means that we are creating 1,000 jobs every day. Estimates vary, but there are between 750,000 and 1.2 million more vacancies in the economy than before the recession. On a parochial note, I welcome the latest figures showing that the number of people in my constituency, Braintree, claiming jobseeker’s allowance or universal credit fell by 110 in 2015. There has been a staggering 59% drop since the economic and welfare reforms that the Government introduced in 2010.

However, looking forward, we have to ask why we have so many vacancies, yet so many people under-employed. Surely the past welfare system must be a contributory factor. We can recognise the impact of perverse incentives without vilifying the unemployed or the under-employed. At no point in this debate have I heard the word “scroungers” uttered from the Government Benches, but many times from the Opposition Benches. That is unfortunate.

We have all had people in our surgeries saying something along the lines of “I am working my 16 hours.” How on earth have we come to this? If taking more work brings extra paperwork, extra uncertainty but little extra money, is it any wonder that so many people decide not to do it? This is fundamentally wrong and must be rectified if we are serious about dealing with long-term under-employment.

Universal credit extends financial incentives to people working less than 16 hours per week and removes the limit on the number of hours that some people can work. The single 65% taper helps claimants clearly understand the advantages of working and planning for the long term. As a Conservative, I want to give people real choices in life. A life trapped on welfare is a life without choices. It is our duty to change this and give people a well-deserved chance to make the very best of themselves and their families. The financial imperative is important, but just as important is the fact that universal credit is a means of getting more people into work and more people into good work.

I have listened to the contributions from Opposition Members. Their arguments are all based on people not changing their circumstances. This fundamentally misses the point of universal credit. I want people to change their circumstances. If they are trapped in low-paid part-time jobs, I want them to change their circumstances. If their employers will not invest in their training because they are only on 16 hours a week, I want them to change their circumstances. If they are stuck on the minimum wage, I want to see them able and confident to get better jobs and therefore change their circumstances. Universal credit will be a game changer. I welcome it and I commend it to the House.