Welfare Reform (Cumbria)

Jamie Reed Excerpts

Wednesday 16th July 2014 Westminster Hall

[Mr Jamie Reed (Copeland) (Lab)]

It is a pleasure to serve under your chairmanship again, Mr Dobbin, in this brief debate. The social cost of the current Government’s welfare reforms is extremely high and is being keenly felt in west Cumbria. The Welfare Reform Act received Royal Assent in March 2012 and has now been in force for more than a year. This debate, however brief, is crucial in assessing some of the devastating consequences of that Act on the people and communities of west Cumbria.

Before I begin, I would like to express my thanks to the Right Rev. James Newcome, the Bishop of Carlisle, to Willie Slavin, an incredible community champion in my constituency, and for the work of the Cumbria Welfare Reform Commission. The report that it has produced forensically details the impact of the Government’s reforms and informs much of what I wish to say. If the Minister has not had the opportunity to read that report, I hope that she will.

In the introduction to the commission’s report, the Bishop of Carlisle makes it clear that it is not a party political report. He states:

“We hope that our findings and recommendations will be of general use to politicians, civil servants, volunteers and benefit claimants alike. We also believe that, if implemented, those recommendations would ultimately help to save money rather than costing the Exchequer more.”

That is a crucial point in the entire debate.

I also thank the many people in west Cumbria and, indeed, throughout the country who do so much to help those in need. Staff in support roles and the many volunteers who do their best to ensure that those who need support get it deserve the highest praise. I dread to think how much worse the situation would be if we were left without their compassion and commitment.

The reforms seen in the past two years have been all-encompassing. There have been changes to support for in-work benefits and unemployed adults, changes to support for adults with disabilities, the introduction of the bedroom tax and more. The impact of these on individuals and families has been extremely tough, and I will touch on each of them in the debate. But that is not all; the impact on households resonates throughout the entire community and beyond.

The cumulative impact on individual families in a community can have major consequences for local esteem, pride, self-worth and, of course, the local economy. To understand fully the ramifications of what are ham-fisted reforms, we must examine not only the financial hardship that they are causing, but the damage done to communities such as mine and to the people who live in them. The harrowing testimonies of my constituents and the work done by the Cumbria Welfare Reform Commission are tangible evidence that families and communities in west Cumbria are feeling the painful brunt of the Government’s reforms.

The Opposition have consistently supported the principle of universal credit. That has the potential to simplify the working age benefits system and to make it much clearer to people how their financial position would change on moving from unemployment into work. That is right and proper, and we completely welcome it. However, that will be possible only if it is implemented properly and if there is a significant improvement in the relationship between the Department for Work and Pensions and claimants. The Cumbria Welfare Reform Commission highlighted serious concerns on how that has been done to date.

The Government’s welfare reforms will require enormous local capacity to ensure that changes are delivered with minimal disruption, but the Cumbria Welfare Reform Commission report details a truly worrying situation that will inevitably lead to many serious problems when universal credit is eventually rolled out in late 2014 or early next year. The commission states that locally

“Commissioners heard of significant capacity problems within DWP, and many current cases of delays in deciding claims. DWP have recently reduced staffing levels in Cumbria and Commissioners were told that while many back to work advisers genuinely wanted to help, claimants felt they were ‘overwhelmed’. One adviser said he had 400 cases per fortnight; one client said he had not seen an adviser in a year.”

The situation will only get worse. The success of any reforms will live or die by the ease—or, in this case, the difficulty—of getting access to services, advice and support. It is clear that before universal credit is even rolled out, the Government are failing my constituents.

One jobseeker’s allowance claimant told the commission that

“the system is in meltdown...I am no longer able to contact local jobcentre. There is a national helpline but it has long delays. I can’t afford to stay on the phone for hours”.

A young mother who had previously claimed JSA commented:

“I hate the way it’s”—

she was referring to the DWP—

“run…they don’t care…you phone the call centre and they say ‘it’s not our fault…the computer’s not working’...I hate being on benefits”.

A welfare adviser in Whitehaven slammed access to over-the-phone advice, saying:

“DWP call centre—it’s the most expensive way I know to listen to Vivaldi.”

The situation cannot be allowed to continue. The Minister must address these points in her response. I hope that if she cannot, she will commit to writing to me to detail the steps that she will take to improve the situation.

A breakdown in the relationship between claimants and clients and the DWP can have dire consequences. When people find themselves in times of hardship, additional stress and worry can cause significant additional distress. That brings me to an issue that has had an impact on many of my constituents: sanctions. The chief executive of Citizens Advice, Gillian Guy, when describing the current system of sanctions, said:

“The regime is not only self-defeating, it is also poorly administered.”

The evidence just does not exist to support the imposition of disproportionately heavy sanctions. A Joseph Rowntree Foundation international review shows the limited benefits of that, and the Cumbria commission found that research conducted in the United States that suggests some success from sanctions in getting people off benefits is down to claimants dropping out of the system altogether, rather than going into paid employment of any kind. Studies from Europe also show that the use of sanctions is likely to lead to worse employment outcomes, such as lower pay for benefit claimants when they do eventually get into work. The Cumbria commission argues:

“This is because the threat or use of sanctions makes people take lower-quality jobs than if they had been allowed to wait for a better opportunity.”

With regard to zero-hours contracts, the commission states:

“At present their wages plus benefits still leave many unable to pay the basics such as food and shelter. In particular there is a risk of a vicious circle whereby people on a zero hours contract can have their benefits cut if they can’t demonstrate that they can look for other work, but not only does uncertainty about hours required to work in these contracts make this availability difficult, but some employers use exclusivity clauses in their own contracts preventing employees from taking on other work in the rest of their time.”

That paints a desperate picture of the working poor.

In a damning indictment of Government policy, the Department told the Cumbria commission that sanctions

“make the vulnerable more vulnerable”.

How can the Minister allow that to continue? What will the Government do to address it? The Government definition of “vulnerable” is:

“An individual who is identified as having complex needs and/or requires additional support to enable them to access DWP benefits and use our services”.

That is too narrow a definition and will result in many people needing additional support falling through the cracks. The commission found that

“many people sanctioned in recent months have been sanctioned despite exhibiting vulnerability—indeed the sanctioning is often a result of such an expression.”

The impact of welfare reforms on Cumbria’s adults with disabilities is profound, too. Disabled people are twice as likely as non-disabled people to live in poverty; that is well understood and accepted across the House. Those unable to work are disproportionately dependent on benefit rates and therefore, obviously—QED—feel the changes to benefits more acutely than any other section of society. The Government have estimated that, through the introduction of the personal independence payment, the claimant count will fall by 23% compared with the number on disability living allowance. In Cumbria, there are 4,300 DLA claimants, so at least 1,000 individuals will lose their support.

The inquiry by Baroness Grey-Thompson found that severely disabled people living alone or with only a young carer will lose between £28 and £58 a week. One hundred thousand disabled children stand to lose £28 a week, and 116,000 disabled people who work will lose about £40 a week. Those are significant sums, and losing those amounts will have serious consequences on claimants and their families. They are outside this detached, self-obsessed, increasingly weird Westminster club. Let us not forget what is happening to people out there in the real world.

The commission reports:

“Where there are delays and stoppage of benefits, some families also face financial meltdown, leaning on family and friends for money and often becoming dependent on doorstep lenders.”

That has the potential to create a perfect storm of financial hardship, no support and mounting debt. It is a scenario that the Government’s reforms are actively facilitating.

That brings me to the impact of changes to housing benefit. The biggest reform in this field is clearly the Government’s bedroom tax, which affects approximately 4,750 households across Cumbria. It is simply an ill- thought-out policy. The unintended and far-reaching consequences of the bedroom tax are well known. The commission undertook to find out why people “under-occupy”. The vast majority of people do not under-occupy consciously; they do not choose to do it. They find themselves in that position usually as a result of family breakdown, children leaving home or the death of a family member. The Government should realise that after such events, most people would prefer to remain in their own homes close to neighbours, their family and the familiar support networks on which they rely.

Government figures show that two thirds of those who are affected are disabled. When the cumulative impact of the welfare reforms is assessed, it becomes crystal clear why so many of those people are facing serious financial hardship. For many, a spare room is not a luxury that they do not want to sacrifice, but an absolute necessity. I have heard reports of a recently separated father having to sleep on his sofa so that his children can have a bed to sleep in when they visit, and of returning university students who cannot remain in halls of residence outside term time but who cannot move back in with their parents because there is no longer a room for them. I have heard in my constituency offices about young soldiers returning home from conflicts in the middle east and having nowhere to stay.

The Government’s bedroom tax is a blunt and ineffective tool. Families who are forced to move out of social housing into the private rented sector will cost the taxpayer more in higher rents, and more will be lost as a result of arrears and evictions. The National Housing Federation states that two thirds of those who are hit by the bedroom tax cannot find the money to pay their rent, and one in seven are at risk of eviction. Consider that for a moment. That is the clear effect of Government policy. This has been said by many of my colleagues over recent years, but it is worth repeating: let there be no doubt that the next Labour Government will repeal the bedroom tax. As I have said, there is not only a financial cost to the families who are affected, but a cost to our local communities, as I see in my own community.

The report by the Cumbria Welfare Reform Commission highlights a deliberate policy to reduce child density in areas of concentrated social housing, to reduce and manage antisocial behaviour and to create more constructive living environments. The bedroom tax completely undermines those efforts. I am sure the Minister will claim that it is not a tax, but it is. What else could it be? People are forced to pay. They cannot move to a smaller property because there are no smaller properties. In Cumbria, for housing associations to house all under-occupying residents correctly and appropriately, it would be necessary to rebuild the equivalent of 7.5% of our total rented stock as one-bedroom properties.

The Department for Work and Pensions report “Evaluation of Removal of the Spare Room Subsidy”, which was published yesterday, shows that only 4.6% of claimants affected have moved to a smaller home in the social sector. The report contains some startling statistics. For example, 80% of affected claimants say that it is difficult to afford the amount of rent they pay. More than half of claimants report that they often run out of money before the end of the week or month. I sincerely hope the Minister can offer some meaningful advice to people who cannot afford the bedroom tax but cannot move because there is no other housing available.

The impact of the reforms can be seen clearly in my constituency and elsewhere across the communities of Cumbria. There are wards in Copeland in which almost a third of children live in poverty, and in Sandwith the rate is even higher. Food bank use continues to rise and shows no sign of slowing. In the last year, it was up by a third, and now almost 2,000 people rely on food banks. There is a clear correlation between the areas with the highest rates of child poverty and those with the highest prevalence of food bank usage. In Harbour ward almost 400 people, including more than 70 children, used the food bank in the last financial year. We used to believe that to be born British was to have won the lottery of life, but I am afraid those figures paint a very different picture. We repeatedly warned the Government that the effect of their policies would be most keenly felt by the most vulnerable in our society and by the most vulnerable peripheral economies, and so it has proven. Almost one in three referrals to a food bank has been the result of a delay in benefit payments, and a further 17% of referrals are the result of benefit changes. Together, they add up to almost half of all referrals.

The final verdict on any Government is based on how they treat the poorest and most vulnerable in society during the hardest times. The rise in the use of food banks, the reliance on payday lenders and the financial hardship faced by many, which have been brought on or at least significantly exacerbated by some of the Government’s most pernicious welfare reforms, are a damning indictment of their time in office. The Government’s legacy, the legacy of the Secretary of State, the legacy of Ministers and the Prime Minister is one of a growing class of working poor, of disabled people in hardship and of too many people living in turmoil and anguish caused by uncertainty, inflexibility and instability.

The Government should heed the advice of the Cumbria Welfare Reform Commission and the stakeholders who contributed to the report, and review their policies to secure successful implementation of universal credit, ensure that sanctions are not unfairly applied, reduce the complexity and delays in personal independence payments and work capability assessments, and stop pushing families into hardship as a result of their hated bedroom tax. I look forward to the Minister’s response.

[The Minister for Employment (Esther McVey)]

It is a pleasure to serve under your chairmanship, Mr Dobbin, and to reply to the hon. Member for Copeland (Mr Reed). I congratulate him on securing the debate. I have listened closely to all that he has said, so I will answer all the points he has raised.

It is important to put the situation into context. When the Government came into office, it was clear that the welfare system we inherited was in need of reform and was not working. For far too long, Governments had shied away from making any significant reform, and we had ended up with a complex system that had numerous add-ons. It was complicated for all concerned. The benefit system frequently locked people into benefits rather than liberating them and allowing them to get into work. We had to look at that and think about how we could best sort out a complex system that had grown exponentially under Labour.

If we look at the costs, Labour spent £170 billion on tax credits between 2003-04 and 2010, and contributed to a 60% rise in the welfare bill. Supporting that bill was costing every individual an extra £3,000 a year, and 1.4 million people spent most of the past decade trapped on out-of-work benefits. Around 2.8 million people spent at least five years on some sort of out-of-work benefit. Youth unemployment rose by 45% and long-term unemployment doubled under Labour. Those were the things we had to tackle. The explosion in those numbers came during what some might have called a boom period, between 1997 and 2005.

It is worth noting that at the 2010 election, when we took over, there were 600,000 more people in relative poverty than there are today. There were 300,000 more children and 200,000 more pensioners in relative poverty. There were 400,000 more workless households and 50,000 more households in which no member of the household had ever worked. The hon. Gentleman’s contribution to the debate did not relate to the reality of those facts and figures.

[Mr Reed]

I am grateful to the Minister for her response so far, but she has not yet touched on a single issue that I raised about my constituents and the county of Cumbria.

[Esther McVey]

I am putting the situation in context and showing how many of the figures that the hon. Gentleman cited were inaccurate. I am putting into context why and how we are doing things. Today, the most recent employment statistics have been published. The aim of all our benefit changes has been to liberate people and help them to get into work, and today we have seen a record rate of people getting into work—a rate matched only pre-recession, in 2005. That is nearly 1 million extra people in work this year, and nearly 1.8 million people in work since 2010.

[Mr Reed]

rose—

[Esther McVey]

I will give way to the hon. Gentleman if he will provide some facts rather than fantasy.

[Mr Reed]

Fantasy is the Minister’s exclusive preserve. We clearly disagree over the figures, so will she come to my constituency? Will she come and do a tour of Cumbria, meet people and speak to them about the realities of their lives and the effects of her policies? Yes or no?

[Esther McVey]

I was in Cumbria only a week or two ago, discussing those things. I get out regularly and speak to people right across the country, many of whom have told me how they had been abandoned on long-term unemployment, but not any more. Many of them have been on the Work programme and they have now got a job. About 5 million people have been through the Work programme and 300,000 have got sustained work.

Looking specifically at unemployment in Copeland, the hon. Gentleman will be delighted that unemployment has come down by 25%, long-term unemployment is down 30%, youth unemployment is down 36% and long-term youth unemployment is down 40%. That is specifically in his constituency, and those figures are not mine or the Government’s; they are the latest independent, verified figures. I would like the hon. Gentleman to apologise for what he said.

--- Later in debate ---

[Mr Reed]

Of course there is no apology to be offered, because none is deserved. Does the Minister recognise the phenomenon of in-work poverty?

[Esther McVey]

There have always been people in work who find things hard. The figures I read out have significantly reduced under this Government. The process, ideology and thought behind universal credit is to ensure that work pays and that every extra hour worked pays, rather than having cliff edges as we had under the old system with which the hon. Gentleman was happy to live. People did not know whether it was right to get a job. They could be locked into benefits because there was a cliff edge at 16 hours a week. We have sought to remove all those things.

Cumbria county council has set up a county welfare reform group to keep a keen eye on the delivery and administration of welfare reform. A Jobcentre Plus manager is part of that group, enabling us to ensure that all concerns and worries are heard and addressed. I understand there is a good, close working relationship, so if anyone has any specific issues or concerns, they can go through Jobcentre Plus, and that is reflected in the survey of what goes on in the area. All of that is key.

There are nearly 24,000 Jobcentre Plus staff across the country. Their main aim is to support people by helping them with the benefits they need when they come through the door and by helping them into work. The Government have ensured that that relationship is more personal than ever before. We have introduced a claimant commitment, so that when someone comes in they can say, “This is what I hope to do,” and we will say, “Okay. How do we get you on that journey?” There has been a significant shift in the approach and in what people do. Perhaps the hon. Gentleman would like to visit his Jobcentre Plus and see that transformation in everything that happens.

[Mr Reed]

The Minister will appreciate that I have done that many times. The report makes it clear that there is an obvious competence deficit in the roll-out of these policies by the Department and Ministers. It is not only claimants who are saying that; people who work in jobcentres and non-party political figures such as the Bishop of Carlisle are saying it, too. Does the Minister regret the lack of competence in the entire policy platform?

[Esther McVey]

The chap obviously wants to write a press release—he wants to write something that is not true—to put in his local papers. Competence is not an issue. We have introduced some of the biggest ever welfare changes. We know they are working, because the things that the hon. Gentleman and his party talked about, such as double-dip and triple-dip recessions, never happened. They talked about an extra 1 million people being unemployed. It was wrong—it did not happen. He and his party put across terrible scare stories, but they did not happen. In fact, the total reverse happened. Nearly 2 million extra people are now in work, and they are predominantly full-time, permanent jobs. That is wonderful news. There are record rates of women in employment. Youth unemployment has fallen for 10 consecutive months, and it is now 127,000 lower than at the general election. Long-term youth unemployment is also lower than at the general election. I gave him the unemployment figures for his specific area, and they are all significantly down.

--- Later in debate ---

[Mr Reed]

I am uncertain whether the Minister is disputing the figures in the independent report. Will she be categorically clear about that? Does she accept the figures and the findings of the report? The Bishop of Carlisle and an independent group of people assessed the impact of welfare reform on Cumbria, not just my constituency. Are they wrong? Are their figures wrong? If they are, what is their motivation?

[Esther McVey]

Most people’s motivation is for the best and is to support people—

[Mr Reed]

Are the figures right or wrong?

[Esther McVey]

Hang on a second. People produce figures that have not been fully authorised, cleared or passed off. Our figures have to go through the National Audit Office and independent bodies such as the International Labour Organisation because their estimation of what has happened are much more thorough and valid. Estimates based on very small samples may be right, but they can be distorted by the smallness of the sample.

I will now make a little headway, as I believe I have been generous in giving way. The hon. Gentleman has made many points that, as I have pointed out, are not particularly accurate or are distorted by the prism through which he wants to see things.

[Mr Reed]

Will the Minister give way?

[Esther McVey]

No, I will not give way at the moment. We have talked about why the spare room subsidy was introduced—

[Mr Reed]

Bedroom tax.

[Esther McVey]

The hon. Gentleman wants to call it by another name. I am happy to call it by either name, but in statute it is the removal of the spare room subsidy. [Interruption.] The hon. Gentleman is smiling, so he obviously realises that his own party introduced it for the private rented sector in 2008. Indeed, his party was going to introduce it for the social rented sector, as we have read in Hansard. He is smiling and pretending that it is something that he might or might not do, but in reality it came from his party. Why did that come about? Because the housing bill had doubled in 10 years, reaching £26 billion, which we all know was a bill that we could not afford after the financial crash and after the biggest ever recession in peacetime since 1930.

[Mr Reed]

On a point of order, Mr Dobbin. The Minister is refusing to talk about the issue at hand. There is a blanket refusal to talk about the impact of welfare reform in Cumbria and west Cumbria in particular. How can that be in order?

[Jim Dobbin (in the Chair)]

I cannot take that decision. I am chairing this debate, that is all, so it is not a matter for me.

--- Later in debate ---

[Esther McVey]

I am in order. I have given the employment stats for what is going on in the constituency of the hon. Member for Copeland, and I have spoken clearly about what is happening in his jobcentres. We are now talking clearly about what is going on in his constituency with the spare room subsidy. I am saying why those decisions were taken, because I cannot give a specific answer unless people know the generality.

What happened with the spare room subsidy? We could not afford it. Labour had already introduced the measure. We have to consider the 2 million people on the housing waiting list and the 400,000 people in overcrowded accommodation. We have to ask how we will support the taxpayers paying for it, who might not have spare bedrooms themselves, as well as the people on waiting lists and the people in overcrowded accommodation. We took a decision, which had to be that people with a spare bedroom who are more than happy to stay would now have to pay for that spare bedroom. We also said that we would treble discretionary housing payments for affected areas to allow people to move if they wanted.

Discretionary housing payments were given to six different areas in Cumbria, but interestingly, although councils that needed more money for discretionary housing payments applied for money from a £20 million pot shared across the country, Cumbria did not do that. There was not one bid. There could have been—if Cumbria had thought that it needed more money to help more people in the area, there was an extra pot of £20 million. Unfortunately, only £13 million was deployed to the various places that made requests, and £7 million went back to central Government. Places such as Copeland did not ask for that money, so it must have been deduced that they did not need the money. If the local MP would have liked to have helped his local council and constituents by doing a bit more prep and homework—rather than arguing afterwards, once he had missed the money and once the money had been spent—he could have got some of that money and helped the constituents he is talking about. Unfortunately, he chose not to do that.

We were talking about how PIP is being introduced and why. DLA spending had increased considerably, and there is still an increase in expenditure. DLA has not been cut—it has been increased; it is just not growing as rapidly as in the past. What we had seen under DLA, which is why we are changing it, was that people did not have additional corroborating medical evidence. More than half of DLA claims do not have such evidence, so we are saying, “Under this Government, and in this Parliament, we will give out this money and we will support people as best we can, but we need to focus that money on those who need it the most. It is therefore vital that we have that corroborating medical evidence.” That is what we are doing.

[Mr Reed]

The Minister should be embarrassed by her response to this debate. She has refused to accept—