Universal Credit and Welfare Reform

Kate Green Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Byrne]

Exactly—as if British businesses were not struggling enough. The point is that the 500 pages of evidence submitted to the Select Committee on Friday present to the Secretary of State a whole range of issues to which we have received no answers, despite the fact that the system will go live in 150 days. The system is already over budget and late, and I am afraid that we now need some urgent answers from the Secretary of State this afternoon.

[Kate Green (Stretford and Urmston) (Lab)]

Does my right hon. Friend agree that one of the great concerns of the many agencies that he has mentioned—they are worried about how universal credit will affect the client groups that they work with—is that the funding of those advice agencies that could support individuals is being squeezed and that there will simply be no access to support, either to make applications or to sort out problems when things go wrong?

[Mr Byrne]

That is a real concern. I know from the fact that a number of advice centres in Birmingham have been forced to close that advice is simply not available for many people in some of the most deprived parts of our country. They are being asked to contend with a new benefit system that is complicated and vital to their living standards, so that is a real worry. I hope that the Secretary of State will take that into account in his response.

I am going to draw my remarks to a close, because I know that many hon. and right hon. Members want to contribute to the debate. All I will say to the Secretary of State is that, following the recent attacks on him by the Treasury, the Cabinet Office and No. 10, he could be forgiven for wanting to retreat to the deepest, darkest bunker in Whitehall. The truth is that his Department is already one of the most secretive in Government. He is refusing to publish information about the Work programme and he has refused Labour’s freedom of information request to release the business case for universal credit. I know that he does not always see eye to eye with the Minister for the Cabinet Office, but I hope that he will pay heed to his words:

“Transparency is at the heart of our agenda for government…We are unflinching in our belief that data that can be published should be published.”

Unflinching indeed.

Universal credit is a massive project—it is too big to be allowed to fail. We need to make sure that it is on track and I hope that the House will join us in sending an unequivocal message to that effect this afternoon.

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[Mr Duncan Smith]

First, I will answer the second question. That is exactly what we intend and we believe that we are on track to do just that. The right hon. Gentleman and the House should realise that this is not, as has been the case with previous IT programmes, a “waterfall” approach whereby everything explodes and is launched on one date, which I think the previous Government used to realise was probably not a good idea. This will be a progression over four years, so that, as we bring in different groups, such as jobseeker’s allowance recipients, and first address the flow, then the stock, and then look at tax credits and how they fit in, we can make sure that we get this absolutely right at every stage. We know that there are important things to consider so that people do not suffer as a result of universal credit. We want to get this right, even as we do it.

We agreed on the £2.5 billion figure. That is our position. As we look at all these things, including the disregards, we see that we can realise better ways of doing them. It is a work in progress. That is how we are able to achieve these things, just as when we looked at them originally.

The right hon. Member for East Ham (Stephen Timms) has peppered us with freedom of information requests, which is exactly what an Opposition Member should do. However, it does him and the shadow Secretary of State ill to lecture us about releasing business cases. When they developed employment and support allowance, a system about as large and complicated as this one—I think that the right hon. Member for East Ham was a Minister in the Department at the time—at no stage, despite the request, did they ever release their business plan to us.

[Kate Green]

I wonder whether the Secretary of State will clarify something that he said in response to my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne). He said that the change would be implemented in stages, with first the flow, then the stock and then tax credits. Surely the tax credits for the first claimants to receive universal credit will have to be brought in on the first day of universal credit.

[Mr Duncan Smith]

No; it has always been part of the process that jobseeker’s allowance will be the first to move across. I am happy to discuss that further. Universal credit will run in parallel with the other systems until we shut them down and move them across. That is the way it will work. That has always been clear. I think that the Chair of the Work and Pensions Committee knows that, because I have been open with her about it from the word go.

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[Charlie Elphicke]

The hon. Gentleman lives a bit more in the past than I do; I am the second earner in my household, as many men are in theirs. We Conservatives, as the more progressive party, understand that. He should know—[Interruption.] He has had his go. He should know that second earners in households will not lose out under the universal credit.

One thing that I particularly welcome is that universal credit is progressive; the poorest will gain most, according to the Institute for Fiscal Studies. It says that the bottom six tenths on income distribution will gain on average, while the richest four tenths will lose out slightly in the long run. This is therefore a progressive policy, benefiting the poorest most.

[Kate Green]

I wish to take the hon. Gentleman up on this point about second earners. The logic of the system is that for the second earner in a couple it will not be worth working more than a very few hours a week. The problem with that is that it will, in the longer run, inhibit that person’s labour market prospects and have an impact on that family’s future prosperity.

[Charlie Elphicke]

Six million second earners will be better off. Importantly, 2.5 million working families will gain in the long run from the introduction of universal credit—again, that is according to IFS figures, not the Government’s figures. The Opposition are normally so keen to use the IFS figures, so it is worth quoting those figures to them and underlining how many people will be better off. That contrasts sharply with the scaremongering that we have heard from the Opposition today.

The other really important thing is that universal credit will help to lift children out of poverty. Universal credit is a transformational change which will affect some 8 million households, and we hope that 900,000 individuals, including more than 350,000 children and more than half a million working-age adults, will be lifted out of poverty as a result. The real question is: why did the previous Government not do it? Why do the Opposition not embrace it and work constructively with the Government on the fine tuning and detailing of this policy to get the best for all our electors, in whichever constituency we represent.

We are also investing an additional £300 million in child care support under universal credit, on top of £2 billion already being spent under the current system. That is worth pointing out, given a lot of the scaremongering we have heard about child care, as it shows the Government’s seriousness about helping out with child care. That will mean that more families than ever before will receive child care support, including 80,000 prevented from doing so by the current hours rule.

Universal credit is the right policy and this is the right time for it. We know that government and IT systems do not make good bedfellows—they do not make happy couples—and that there have been difficulties in the past. However, the previous Government should not judge this Government by their standards, and we should look at the implementation of employment and support allowance, as that was not an IT disaster. The Department for Work and Pensions has a good record, so we should give it the benefit of the doubt. Nevertheless, we should watch carefully to make sure that all goes well and all continues to be moving on time. Universal credit is important because it is very much for the many, with 2.5 million households that will gain. That is an important part of the reform.

Finally, we should trust people. There is too much of a tendency in the House to think that no one can manage, that we have to spoon-feed everyone and that no one can take responsibility. It is assumed that if they find it difficult to take responsibility, they should be spoon-fed rather than encouraged, helped and enabled to take more responsibility for their lives.

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[Kate Green (Stretford and Urmston) (Lab)]

It is a great pleasure to contribute to this debate. Of course I welcome the universal credit to the extent that it may encourage people to work at all. However, there is a danger that the fact that it has been designed to provide incentives to many people to work only in short-hours jobs will mean that more people will choose to work in short-hours jobs. Although those jobs can be a valuable stepping stone into further employment, particularly for those with caring responsibilities, we know that long periods spent trapped in mini-jobs can damage individuals’ future earning prospects. Mini-jobs are often more badly paid and more insecure than established jobs with more hours, yet those are exactly the trends that we do not want if we are to tackle in-work poverty.

It is clear that the Government are worried about that aspect of the design of universal credit, because they are planning to introduce into our benefits system—for the first time, I think—a measure of in-work conditionality, to push people working in mini-jobs into working more hours or perhaps getting a better-paid job. We currently have very little information on how in-work conditionality will work. We have not been told what additional resources will be available to Jobcentre Plus to implement it, who it will apply to or what additional training might be given to advisers to cope with the different challenge of dealing with people who are already in work. What we do know—from the DWP’s own research—is that in-work conditionality is one of the least popular aspects of what the Government are proposing when it is raised in the DWP’s research. I therefore invite the Minister to say a little more about in-work conditionality. It has been completely airbrushed out of the debate so far, but it will be extremely important to a substantial number of people who begin in low-hours, low-paid work.

I also want to reiterate the points made by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) and my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), as well as others, about how the logic of the system will push some people to reduce their hours of work, not increase them. My right hon. Friend mentioned the interaction with the rise in the personal tax threshold which, as the charity Gingerbread has shown, means that a £1,000 increase in the personal tax allowance will give £200 a year to every basic rate taxpayer, except those on universal credit, who will gain only £70. Similarly, as we know, the new system will disincentivise second earners in couples, the majority of whom will be women. The Institute for Fiscal Studies has shown that a second earner who is entitled to universal credit when out of work will initially lose 65% of every pound earned when they move into work, rather than 41%, as they do under the current, tax credits system. Indeed, the DWP’s own modelling shows that 900,000 potential second earners will face lower incentives to work under the new policy.

I am concerned about the payment mechanism, with payments typically going to one member of a household. The hon. Member for Oxford West and Abingdon (Nicola Blackwood) pointed out that there are particular concerns where there is a risk of domestic violence or abuse. There is also a concern that money might not get through to children when the element of the benefit that is related to child care or child costs is intended for them. I invite the Minister to explain whether he thinks it is feasible for a woman—or man—experiencing abuse in their relationship to ask the DWP for the benefit to be split or paid all to her, rather than to him. Surely that will precipitate further abuse. I would also like to know whether the Department intends to move towards allowing the benefit to be paid partly to each member of the household and what cost assessment has been made of taking on board requests to pay the benefit in a different way. Would it not be simpler to return to the model, which has been tried and tested—as this Minister knows particularly well—of paying benefits for children to the main carer and benefits for housing to the person with the rental obligation?

Finally, let me ask some quick questions about refuges. I welcome the assurances given today. However, as people are in refuges for only two or three days, because they are dealing with an emergency, can the Minister confirm that rent will be paid directly to the landlord in those circumstances? Can he confirm that where people are in receipt of dual benefits—for their own home and the time in the refuge—they will not be hit by the benefits cap? Can he also confirm that housing costs that are currently met by the benefits system will continue to be met in full? In fact, will the Department publish an equality impact assessment of the proposals? Regrettably, we have so far seen no such thing.

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[Jane Ellison (Battersea) (Con)]

It is a pleasure to contribute to the debate. Needless to say, I do not share much of the scepticism of so many Opposition Members, who I fear are, in some cases, substituting extended concern about the detail, however right and proper, as a proxy for opposing the reform. Some of the support we have seen even for the principle of these reforms is half hearted at best. Given what we have heard in one or two speeches, one would have thought that this Government inherited some sort of welfare utopia in which all was working smoothly, nothing needed amending and only the uprating of benefits was necessary each year.

The situation we inherited was a complete shambles, which is apparent in a constituency such as mine. We are lucky in that many jobs have been created over the past decade in London, yet young people in my constituency have said to my face, “It isn’t worth getting a job; I’m better off sitting at home, playing on the internet and living on benefits”. If that is the case, we have to do something about it. The problem I see is an inter-generational one.

I have listened to many of the detailed speeches given by the hon. Member for Stretford and Urmston (Kate Green) in Public Bill Committee and elsewhere, and I know she makes many good points about the detail that have to be addressed, but this is also about committing ourselves to a principle, quite apart from the rising costs of the whole system. I have seen intelligent women in my constituency being infantilised and reduced to a position in which they do not even back themselves to manage their own finances monthly, and I have seen people with qualifications and degrees who have been out of work for a very long time.

[Kate Green]

rose—

[Jane Ellison]

I shall take just this one intervention, as we are running out of time.

[Kate Green]

No one is pretending that the previous benefit system was perfect, but we should equally acknowledge that for the overwhelming majority of people in it, work did pay more than being on benefits. One instance of how the system was effective in helping to support that is the fact that lone parent employment—mostly female employment—rose from 44% in the mid-1990s to approaching 60% today.

[Jane Ellison]

That intervention misses one essential point—that there were too many in the system altogether. We cannot go on as we are.

Concerns have been expressed about monthly budgeting and other issues, and it is right to look at them. One particular point I want to make in my limited time is about what I hope will be a real engine for creativity in respect of new products to help people. We cannot say that it is only a matter of providing advice services; we need to work harder as a society to create products that work for people who are vulnerable or less financially skilled and so forth.

I do not believe the point has been made this afternoon that there is a real opportunity for a degree of rehabilitation of the banking sector. I represent an area in Battersea where the Clapham sect was active between 1790 and 1830. Its members included Wilberforce and others who were great pioneers of social reform. Not every Member may know that nearly all the Clapham sect were from banking families. I was reminded of this fact by the vicar of St Luke’s church in my constituency this week. She is piloting a meeting to discuss how the world of finance can do more to help the poor and the vulnerable in today’s society, building on the work of the Clapham sect.

I think there is a real opportunity here for the banking sector to use some genuine creativity and to step into the breach and look at ways of providing practical assistance, putting something back into society in the form of serving vulnerable people who, to date, have largely not been catered for by proper banking products or the right support from that sector. It should not be all about the voluntary sector; there is an opportunity for people involved in banks to be true to some of the heritage of the social reformers who have gone before them. I am thinking about jam jar accounts and individual banking, which I know the Department is looking at, as they could prove to be important and life changing for many vulnerable citizens.

My main point is that the Labour party has got itself on the wrong side of this debate. I believe in the welfare state, which is one of this country’s most important and civilised achievements, but if we do not make it work, not just for the people in it but for society as a whole, and if we do not restore confidence in it, we fatally undermine something that represents, as I say, such an important and civilising aspect of this country.

Before I was an MP, when I was candidate, I received an e-mail that was rather similar to the letter my hon. Friend the Member for Gloucester (Richard Graham) told us he received. My e-mail was from a young woman who was a trainee nurse and lived on one of the tougher estates in my constituency. She was a single mum bringing up two children, and she wanted to work. Every morning, however, as she walked down the walkway on her estate, she was mocked, as people shouted at her through the windows of other flats. They said she was a fool to go to work and asked why she was doing it. It is absolutely appalling that we have created a situation in which someone like that, trying to do the right thing for her family, is mocked by the people around her.

Unless the Labour party puts itself on the right side of this debate and understands that we create and maintain confidence in the welfare state as an important aspect of our country by being on the side of that nurse who wanted to go to work and by ensuring that the system always works for her, it will find itself left behind in this debate. I applaud the Government for what they are trying to do. There are risks, and the Secretary of State has been open about them today—of course there are risks in major reform—but it is about meeting those risks head on and making the reform work, not about naysaying it before it has even started.