Universal Credit

Jane Ellison Excerpts

Wednesday 6th March 2013 Commons Chamber

[Jane Ellison (Battersea) (Con)]

The Committee, of which I am a member, identified those real concerns, but does the hon. Lady not agree that there are also opportunities? In my constituency, where English is a second language for many, digital by default offers the opportunity for translation and other services that will in many ways make a digital interface easier to use than a paper form.

[Dame Anne Begg]

The Government’s whole point in doing this is to make the system easier, so hopefully it will be. If it is not easier at the end of the process, we really will have got everything wrong. In the process of introducing this fully, the Government will obviously have to address some of the concerns that hon. Members have raised.

The Government’s response indicates that they expect only 50% to claim online and about 5% to get face-to-face interviews, which means 45% will claim through the telephony system. Perhaps the Minister can explain the wording in the Government’s response. It states:

“Our target is that 50% of claims which can be made online will be made online in October 2013 when Universal Credit is launched nationally.”

I am not sure that I understand that sentence. Does it mean 50% of the total number of people who will make a claim, or 50% of those who can make it online, which will not be everybody. I am not exactly sure what proportion the Government are talking about.

The Government’s response mentions face-to-face interviews, which is good, but they are still for only 5% of cases, and they give not a hint about where the interviews might take place and what proportion of them are likely to be home visits. After all, a large number of people in the universal credit cohort will have severe disabilities. They might receive other benefits that they have claimed previously, but they will also be in the universal credit cohort.

I am also glad to see that jobcentres are to have IADs—internet access devices—which sounds great. The Government response trumpets the fact that there will be computers in Jobcentre Plus offices. However, if we divide the number of computers by the number of Jobcentre Plus offices, we find that it works out at about three terminals per office, and I am not sure whether that will answer some of the questions about access to computers. Also, it appears that wi-fi is not yet available in Jobcentre Plus offices, although that is planned, as it should be available. Many people do not have a computer at home and will need to access their claim form through a public-access computer, whether in Jobcentre Plus or not. They will need help, and the Government’s response is not very clear about that. It does say that staff will be available, but it is very vague: it does not say how many or how much time they will have. Jobcentre Plus staff are already overworked. Will they have the time to sit down alongside someone until they have filled in their whole claim, or will they just get the screen up and leave them to it? For many people, that would not be enough help.

The Government say in their response that they are liaising with local authorities to supply help. However, we all know that local authority budgets are already being squeezed year on year, and that a lot of welfare rights officers, where councils have them, are disappearing, if they have not already done so. There is also a squeeze on organisations such as Citizens Advice. This is such a big undertaking that it is incumbent on the Government to make sure that this help, of the necessary quantity and quality, is there and that people know how to access it. It has occurred to me that as some local authority staff will no longer be employed in administering housing benefit, they might be an experienced resource that the Government could call on to act as advisers in providing the help that many people will need to make an online claim.

Another big area of concern about UC is that it will be paid once a month into a single bank account for each household. The Government’s response says that the Secretary of State has powers to vary the frequency of payments, but this would be time limited. It also says that the Department for Work and Pensions will try to identify claimants with, for instance, mental health or addiction problems who might not manage monthly payments, but suggests that help will be provided for only a limited period. The Government seem to think that a drug addict will somehow be able to learn how to budget properly after a couple of months. The essential problem is that getting a whole month’s money in their hand at once might be too tempting. I do not think that what the Government describe as “transition to monthly payments” after

“getting help with monthly budgeting”

is going to work in practice. Will the Minister clarify that?

--- Later in debate ---

[Nigel Mills]

Despite what some people think, Amber Valley is not in Wales so I am afraid that the use of the Welsh language is not an issue I have to worry myself or my constituents with. I will leave that point for the Minister.

The next area of concern is the single monthly payment per household, and making that replicate what most people in work receive as a salary is a sensible step. We are not talking about people who only receive benefits; people in work will receive universal credit on top of that, and we are trying to encourage them to work more hours and get more money, at which point their benefit will drop. In an ideal world, a single monthly payment that matches timing with salary must be a step forward. We are trying to help people get back into work and not face extra barriers created by the benefit system. Clearly there are issues, however, and some people will not be able to cope with one single monthly payment. We must consider how we will help them through that, deal with the exemption system, and find out that they are not coping before they get into so much debt that they cannot get out of it. It will be interesting to see the progress on new bank accounts, especially the jam jar system, although we have not yet heard how many providers are willing to offer such a system.

[Jane Ellison]

I am glad that my hon. Friend mentioned jam jar accounts because they are important. We have spoken previously about this issue, but it is one on which we are all urging the Minister to give the banks a really good kick. As I said in a previous speech, such accounts are one demonstrable way that the banks could make amends for what the public perceive to be a pretty poor show over the past few years.

[Nigel Mills]

I am grateful to my hon. Friend. We need to know soon how many providers are interested in that system and what the Government’s proposals are. People will be rolling into universal credit soon, and we must understand what their bank accounts will look like to ensure the system works. I have heard lobbying groups present interesting ideas about the real advantages of the jam jar system. People can choose to have their rent payment moved into a separate account so that it goes out on the right day and they cannot accidentally spend it on something else. Applications that use payment cards or jam jar bank accounts can produce useful solutions. Perhaps we can introduce a system under which people have the chance to choose their preferences. People must choose to set money aside for certain bills, rather than be forced in some draconian state-controlled manner and told how to spend their money, but an update on the issue would be useful.

I also want to consider the impact of this system on people who are self-employed. It is clearly right that they state each month what profit they have made so that any benefit they are due can be worked out. It is equally right that we encourage them to work hard and make a minimum level of profit and not somehow get round the system that applies to people looking for paid employment. I am a little concerned that we will end up with two different reporting and accounting systems. For universal credit people will have to report their monthly profit or income based on some kind of calculation, yet for tax purposes they will have to use a completely different calculation. That could leave them with two different sets of books and calculations which could be hugely complicated and they may end up with some true-up at the end. Hopefully, people can get some assurance that what is expected for universal credit is the same as HMRC expects at the end of the year. It could be nice and simple—people could hit a “total” button on the universal credit system and it will say what their annual profits have been.

--- Later in debate ---

[Nick de Bois]

I am glad to have spirited into being some Front-Bench dialogue.

[Jane Ellison]

My hon. Friend is right that we must be conscious that these are vulnerable people, which is what the Committee report was about. Exaggerating for political purposes the possible problems, which we have all acknowledged, runs the danger of most alarming and leading astray the people we most want to help.

[Nick de Bois]

My hon. Friend makes extremely well the point I made so badly.

The shadow Secretary of State knows the history of Government IT systems. Given that history, it is inevitable that there will be some genuine concerns. When I was rolling out IT systems in my company, it filled me with horror; I knew we would end up exceeding the budget and that the timetable would come under threat. In those days, we dealt with it by shadowing the new system with the old system. I give credit to the Government for not having gone for the big bang effect and for seeking to roll out the system gradually. Had I been in their position, I would probably have made the same decision, but the proof will be in the pudding. Nevertheless, they have learned from previous mistakes. I was delighted to hear the Minister’s confident assessment, which I have no reason to doubt, and I think they have taken every reasonable step. Will there be problems? I am certain of it, but I do not think that they will be insurmountable.

[Ms Margaret Ritchie (South Down) (SDLP)]

I acknowledge the good work that my hon. Friend the Member for Aberdeen South (Dame Anne Begg), the Chair of the Work and Pensions Committee, has done on benefits and the implementation of universal credit, particularly the impact on vulnerable people. The Committee highlighted the fact that vulnerable people are usually benefit claimants and so will be subject to the overhaul of the benefits system, and that many communities, and particularly those who will need it the most, will be deeply impacted by the online universal credit—admittedly, a telephony service will be available—because they will have great difficult accessing it.

It is important that the DWP can implement the IT system. Back in 2008, in my former life as Minister for Social Development in Northern Ireland, I introduced a parallel system for household fuel payments. It was outside the benefits system, but it required the help of the DWP and was an extremely difficult job. There were people who fell outside it who should have been eligible, but because of the nature of the IT system things proved difficult. I say that by way of warning. Also, owing to topographical difficulties, some claimants might not have broadband access, which raises issues about payment methods, and then there is the question of passported benefits.

My party has been against the introduction of universal credit from the outset. It is a misguided and draconian change to the benefits system that will neither save money nor encourage people into employment nor protect the most vulnerable. We are for welfare reform, but not for unfair reform. We recognise the need for a simpler, more accessible benefits system, but these reforms are an attack on the most vulnerable and will actually end up costing the taxpayer more through transition and administration costs.

I am extremely concerned about the long-term impact of the tone that the Government have taken throughout this and previous debates on welfare reform. The persecution of those on welfare—labelled “skivers”—is socially divisive and acts to marginalise and ostracise many people suffering disability, illness and impairment. It is casting down the very people whom the Government claim to be encouraging into work.

As the Minister will be aware, social security provision is devolved to Northern Ireland and implemented under a separate system known as parity legislation. In a previous life, I had to implement some of it. Under that system, we normally have little scope for variation, which means that we will be subject to the worst elements of these measures. I welcome the flexibility arrangements the Government introduced in Northern Ireland enabling split payments—two payments a month, rather than one—and payments to be made directly to landlords, rather than to the claimant, but the core of the changes remains and will be extremely damaging for our people and economy.

We need additional flexibility, owing to our high level of disability—a throwback to the troubles, which left people scarred by violence and terrorism—and higher percentage of people dependent on benefits. I ask the Minister and his colleagues to work with the Minister for Social Development in Northern Ireland to introduce that flexibility. Earlier today, I asked the Minister of State in the Northern Ireland Office about this subject in Northern Ireland questions, but his reply left me aghast: he said we should be getting more people into work. That is fine and laudable, if the work opportunities are there, but they are not, so let’s get real. We need to support these people, not marginalise and persecute them. These measures are likely to push more people into poverty and, in doing so, increase the welfare budget.

[Jane Ellison]

I am clearly not as familiar with the situation in Northern Ireland as the hon. Lady, but I do not recognise her description of persecution, marginalisation and ostracism. The Committee accepted that there were definitely some people about whom we were far more worried than others, but we took the general view that the system had a reasonable chance of working for the majority of people, even allowing for implementation issues. I just do not recognise her description of the system.

[Ms Ritchie]

I was saying that there were particular circumstances prevalent in Northern Ireland that perhaps did not exist in other parts of the UK because of the higher number of people who were more vulnerable and dependent on benefits. We are coming out of a conflict situation and, as a result of that legacy of conflict, more people rely on benefits and are, through no fault of their own, unable to access or find work. Those job opportunities, which might exist here in Britain, are not there.

[Jane Ellison]

rose—

[Ms Ritchie]

I would like to finish this point and move on. The third report by the Work and Pensions Committee states:

“We consider that the implementation timetable is ambitious and that there is significant further work to be carried out to ensure that the needs of the most vulnerable claimants can be met.”

Let me turn to the cost of universal credit. The rationale given by the Government is that the legislation is about making work pay and helping people into work. However, the driving motivation appears to be cutting costs, with those on welfare easier to scapegoat than the tax avoiders in society. Moreover, the figures suggest that, rather than saving money, the changes will increase the welfare budget. The Government’s own impact assessment suggested that £2 billion was set aside to fund the transition to universal credit in the 2010 spending review period and that net transfer payments from the Government to households would be around £0.3 billion higher once universal credit was fully implemented and transitional protection exhausted, while the Institute for Fiscal Studies has valued the long-run cost of universal credit at around £1.7 billion in 2014-15 prices. Furthermore, it has been stated that £18 million—£13 million in resource and £5 million in capital—will be delivered to Her Majesty’s Revenue and Customs to cover the costs associated with implementing universal credit

That suggests that the new system will be not just ineffective, but expensive. Experience suggests to me that the costs of such a project are likely to go up rather than down, once the projections meet the reality, as was the case with the change from incapacity benefit to workplace capability assessments. That has been a difficult issue in Northern Ireland and a traumatic experience for those who have been put through it. The resulting volume of appeals—a high proportion of which were successful—illustrates just how ineffective the changes were. I feel—I suppose I say this with a certain level of temerity—that the Government do not seem to be heeding that lesson. I fear that there will be an even more catastrophic impact when universal credit is fully introduced.

I have made it clear that I am against the substance of this welfare reform and its introduction, and I am dubious that it will actually save any money, but I also feel that there are likely to be a number of technical and administrative issues that could be extremely problematic and that we could run into financial problems as the system is rolled out in Northern Ireland in April 2014. I ask the Minister to look at those. I would also ask the Chair of the Committee to look into this and perhaps work with the Social Development Committee in the Northern Ireland Assembly to see whether these issues can be worked through. The project has already been delayed because of IT problems, and I have had very little reassurance that that will not happen again.