Universal Credit (Children)

Jeremy Quin Excerpts

Tuesday 10th May 2016 Commons Chamber

[Stephen Timms]

No, I do not think that that is fair. There is now a large and growing group of people who are significantly worse off than they would have been because they have the misfortune of being in an area where universal credit is paid instead of tax credits. My hon. Friend is absolutely right to draw attention to that.

When the universal credit project started in 2011, we were told that it would be completed in six years. Today, five years later, we are being told that it will be completed in another six years, by 2022. Five years into this initiative, its expected completion has been delayed by five years. We are no nearer the end now than we were told we were five years ago.

[Jeremy Quin (Horsham) (Con)]

The right hon. Gentleman was generous in his support of the principle of the scheme. Surely he must accept that it is better to get it right. A steady, phased implementation is the right way to ensure that the benefits to which he referred are properly implemented across the country.

[Stephen Timms]

Of course that is right. There should have been a sensible timetable and plan from the start. It was pointed out to Ministers that the original plan was unrealistic, but unfortunately they took no notice of that.

It is not just the timetable that has changed, however, but the substance. What is being implemented is now significantly different from what it was originally going to be. A report published last week by the Resolution Foundation has made that very clear; I will refer to that report a number of times in my speech, but at this point I will quote one observation from its executive summary, which says that

“the latest series of cuts—announced at last year’s Summer Budget—risk leaving UC as little more than a vehicle for rationalising benefit administration and cutting costs to the Exchequer.”

That is at the heart of this debate. Universal credit is now set to be a pale shadow of what Ministers initially announced. The losers, both from the cuts made to the original proposals and from flaws in the original design that have never satisfactorily been addressed, will above all be the nation’s children.

The Resolution Foundation has explained the impact of the £3 billion cut announced last summer:

“As initially designed, UC gave broad parity with the current tax credit system…Now, UC will…be less generous than the tax credit system for working families.”

That is what gives rise to the anomaly and unfairness to which my hon. Friend the Member for Neath (Christina Rees) drew our attention.

--- Later in debate ---

[Peter Heaton-Jones]

I am glad the hon. Gentleman mentions the IFS, because it also said that

“universal credit should make the system easier to understand, ease transitions into and out of work, and largely get rid of the most extreme disincentives to work or to earn more created by the current system.”

The IFS seems to quite like the introduction of universal credit, which has to be looked at in the round. The Government are introducing a whole package of measures. I listed some of them. The growing economy and rising employment also help.

The other issue that is not taken into account when we consider universal credit is what is sometimes referred to as the dynamic impact—a horrible bit of jargon—of universal credit. This seeks to take into account changes in individual behaviours in response to the introduction of universal credit. It is quite difficult to analyse but it means improved opportunities for people to move from welfare into work, which changes people’s behaviours. This is a vital point. Even though it is in its early stages of introduction, as pointed out already, there is significant evidence that universal credit is doing well and succeeding at ensuring that more people move off welfare and into work. The latest figures show that for every 100 people who found work under the old jobseeker’s allowance system, about 113 universal credit claimants move into a job. What matters, however, is not just the fact of moving into a job but the quality of the job and the pay, and people are actively looking to increase their hours and their earnings as well.

[Jeremy Quin]

Does my hon. Friend, like me, welcome the emphasis on in-work progression? The story does not end when someone happily gets into a role. It matters also that they are encouraged through Jobcentre Plus to improve their hours and their standing in the firm and get paid more over time.

[Peter Heaton-Jones]

I absolutely agree with my hon. Friend. That is important, and the latest figures show that 86% of claimants on universal credit are actively looking to increase their hours, which compares to 38% under JSA, which is a significant difference. People are actively looking to increase their earnings as well, which goes to the heart of his point. Some 77% of those on universal credit are actively looking to increase their earnings, compared to 51% on JSA. That is a really important part of the universal credit package.