Covid-19: DWP Update

Jonathan Reynolds Excerpts

Monday 4th May 2020 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op) [V]]

I thank the Secretary of State for advance notice of her statement. May I add my thanks to the dedicated frontline staff of the Department for Work and Pensions for everything they have done and are doing during this crisis to ensure that we can process the unprecedented volume of claims that have been made?

I welcome the measures the Secretary of State has announced so far. The social security system we had going into this crisis was a safety net with too many holes in it, and it is good that the Government have recognised that. My questions for the Secretary of State are about how we can widen that net so that everyone who needs support gets it, and about the steps that will need to be taken as we move from response to recovery.

First, the Government have significantly increased universal credit, but people on legacy benefits such as jobseeker’s allowance and employment and support allowance have not seen a corresponding increase in their benefit. More than 100 charities have pointed out that that discriminates against disabled people in particular. When will those benefits be uprated?

Secondly, there are now 100,000 families who will not be able to receive this increase because they are still limited by the benefit cap. The Government say the benefit cap exists to force people to work more hours or move to cheaper housing, both of which are clearly impossible during the crisis. Almost every organisation, from the Institute for Fiscal Studies to the Resolution Foundation and the Child Poverty Action Group, believes it should be temporarily suspended. Does the Secretary of State agree?

Thirdly, anyone who has been saving for a housing deposit, for a rainy day or for a substantial item could find themselves ineligible for universal credit because of those savings. Those people paid into the system when they were in work; should it not be there for them now? I do not believe we should punish those savers, and I believe those saving limits should also be suspended.

Fourthly, the Government say the two-child limit exists so people supported by social security have to make the same family choices as those who are not, but this crisis shows how absurd that claim is. People could not have been expected to make family choices three years ago based on the likelihood of a global pandemic shutting down our economy. The Government have suspended sanctions during the crisis, but the two-child limit is effectively an 18-year sanction on the third and fourth child in a family. Surely it should go too.

Fifthly and finally, those people who are eligible for support from universal credit will still have to wait five weeks for their money or take an advance that will be deducted from future payments. Many people do not appreciate that if they claim universal credit before they receive their final salary payment, their income means they have no entitlement for their first month and could have to wait as long as nine weeks for any payment. Since it was introduced, the five-week wait has been the single biggest driver of housing arrears, short-term debt and food bank use in the country. It should not exist at all, but in this crisis it is particularly egregious, and it simply must go.

May I also raise a very specific issue with the Secretary of State? It has come to light that the universal credit regulations treat maternity allowance, which is received mainly by low-paid women, as unearned income but statutory maternity pay as earnings, which are disregarded by the work allowance. That could result in a low-paid pregnant woman being as much as £4,000 a year worse off. Why is that? Will it change?

I turn to preparations for the recovery. As the Cabinet Minister responsible for the Health and Safety Executive, what conversations has the Secretary of State had with it about the process by which workplaces will be made safe when people are asked to return to work? When the lockdown began, most MPs were inundated with questions from constituents still in work about whether their workplace sounded safe. That simply will not do when lockdown ends. There must be a clear process agreed by the workforce and management, not least because a failure to do so would likely result in significant litigation.

This crisis has confirmed in terms what the UK’s unequal and unfair labour market really means. Although some people have been able to work from home on full pay, others have faced having to go into work and risk their health, or have lost their job through no fault of their own and will receive social security or sick pay set at just a fifth of the UK’s weekly median income. More than 4 million British children grow up in poverty, living in poor accommodation and perhaps without the internet connections many of us take for granted. The lockdown will have a severe impact on their wellbeing. Many have likened our response to coronavirus to fighting a war. If that is true, the aftermath should be equally so, with a renewed national effort to fight the inequality, poverty and insecurity that should have no place in this country at any time.

[Dr Coffey]

I thank the hon. Gentleman and welcome him to his position. We are in an unusual place today—literally, as he is appearing virtually for our first exchange in a statement—but we will be seeing each other again next Monday at questions.

On legacy benefits, I should stress that the increase to working tax credits and universal credit is only temporary —until 12 months from when it was applied. There are two things here. First, we have a digital UC system. The working tax credit system is digital. It is far more straightforward and it was quick to change that. It would take quite some time to change the legacy benefits system—I am talking about several months—with the process we have. When we make changes to benefits, they tend to happen four or five months before the actual changes come through, because that is how long it takes our computer systems to work.

Secondly, the statutory sick pay weekly rate is about £95. The change to UC is about £94. We anticipate and hope that people will be on UC for a quite a short time while we go through this significant emergency. It was, as I pointed out, straightforward to change that. There are other things that people will benefit from, including the work we have been doing on mortgage holidays, on stopping renters being evicted due to issues connected to covid-19, and on electricity pre-payment. No utility supplier will restrict supply due to issues at this time.

On the benefit cap, I said in my statement that it is not the intention to change fundamentally the process, principles or application of universal credit. I am conscious of the benefit cap, but we are still talking about a potential yearly income outside London of £20,000, or £23,000 in London, being given to benefits claimants. I am conscious that that could effectively be something like a £25,000 to £30,000 take-home salary after we take into account taxation and similar, so I do not think it is necessary right now to change the benefit cap. What I do want to point out to the hon. Gentleman is that claimants may benefit from a nine-month grace period, where their UC will not be capped if they have a sustained work record.

On the savings threshold, there is no universal credit eligibility where people have savings of £16,000. UC is designed to help the poorest in society. I am conscious that, if any changes were contemplated, they would have taken some time to process. We have decided to focus our efforts on those who are the poorest in society. I should also say that money saved for taxation payments, such as by the self-employed, will effectively be treated as business assets, and so would not be included for consideration or be deemed personal savings.

On the five-week wait, there is no intention to change that. In fact, in terms of the largest number of people who have claimed, this will be our biggest payment week going ahead. I am aware of what the hon. Gentleman says about people who have been paid in the last month. My understanding is that there is a phasing issue in terms of the calculation of universal credit payments that people would be entitled to with regard to the standard allowance. One of the benefits of having the advance is that it is designed to spread an annual income over 13 payments, instead of 12. For people who are going through that right now, my recommendation is that they should consider getting the advance. As I say, the total annual payment will be spread over the year.

On universal credit regulations relating to maternity allowance and statutory maternity pay, I will look into that for the hon. Gentleman and write to him. I know that quite a lot of consideration has been given to the different rates supporting people in maternity, but I will write to him on that.

On people only receiving statutory sick pay, I point out to the House that that is a legal minimum, but one of the purposes of the furlough scheme was that people, instead of being made unemployed, had this opportunity. Of course, if people are sick, an employer is entitled to do statutory sick pay. I should also point out that the furlough scheme can be applied straightaway for people who have been shielded and cannot go to work and cannot work from home, and we are encouraging employers to do so.