Universal Credit (Work-Related Requirements) In Work Pilot Scheme and Amendment Regulations 2015

Lord Farmer Excerpts

Thursday 22nd January 2015 Grand Committee

I recognise that this is a marked departure from the more static DWP trialling approaches of the past. However, we believe that this more dynamic approach provides the best opportunity to build the evidence we need while retaining the right balance in safeguards and flexibilities. I commend the regulations to the Committee.

[Lord Farmer (Con)]

My Lords, rolling out universal credit and optimising such a colossal and innovative system without an iterative process of trial and error should be inconceivable. I am grateful for the opportunity to discuss these regulations because I see them as a sign of a fresh wind blowing through large-scale publicly funded social policy projects, which is an unapologetically experimental approach, as the Minister said, in the most robust sense of the word.

I also understand a randomised control trial methodology is to be implemented, as the Minister said, and it is the gold standard when it comes to experimental design. I am not a social scientist: I am a businessman and conscious that writers such as Jim Manzi, as has been mentioned, have been taking my world by storm by insisting that leaders there can and should use what he refers to as RCT experiments to test decisions in a controlled, low-risk environment before committing their firms and shareholders to large-scale and expensive changes.

We owe it to the people who are the subjects of similarly large-scale social programmes and the taxpayers who fund them to test what we think will work best and learn from that process whether they are in fact being aided effectively and cost-effectively. Both are important.

The Washington State Institute of Public Policy has led the world by raising the bar for policy development in this regard. All sorts of approaches might make a little difference but let us sink our resource into the ones that will help people make the most progress. Honing the many facets of the most effective approach requires the iterative and flexible piloting legislated for in Section 41 of the Welfare Reform Act on which these regulations are based.

As one who is used to having a free hand when it comes to undertaking the necessary fact-finding and research prior to investing my own and my clients’ money, I want to emphasise how innovative and important this flexibility is. As we have heard, static trials have been the standard fare of DWP research contracts but the Minister has already made clear how innovative the proposed assistance is. We have to roll out in-work support that ultimately could help hundreds of thousands to escape a low-income existence while, at the same time, testing and adjusting the assumptions different forms of support are resting on for a wide range of diverse people.

Moreover, it is my understanding that the DWP expects about 1 million universal credit claimants to fall within the “working but could do more” category. If the department wants to help such an enormous and diverse cohort effectively, it seems entirely appropriate that a flexible research model is adopted.

However, I have some questions. First, what does the 1 million figure represent as a percentage of all universal credit claimants and what benefits in terms of cost savings might there be to the country if people can be consistently helped to overcome barriers to raise their wages? In other words, what is the great prize that these trials can place within our reach?

Secondly, I am pleased to learn from the September 2014 minutes of the Social Security Advisory Committee that detailed guidance will be given to work coaches on the pilot, so that anyone randomly chosen to take part in this test-and-learn approach who is deliberately working fewer than full-time hours in order to get a business off the ground will not be forced to take part. A research agenda must not become the tail that wags the dog. Forcing someone to accept help to build up their hours when they are already taking steps to improve their circumstances and possibly even to employ others would be a perverse use of public time and money. It would also undermine the purpose of the trial.

Obviously, there need to be two-way safeguards. Selected claimants may be particularly concerned about complying with all the requirements placed on them under universal credit, not least to avoid sanctions, as they may be in a financially precarious position. They may not realise that there are exempted categories in the guidance. Will the Minister give an assurance that all people who are chosen for trials will be made fully aware of the characteristics, including permanent disability, that mean that their involvement is not mandatory? Given the lack of public and media awareness of exemption for many disabled people from the withdrawal of the spare-room subsidy through the use of discretionary housing payments, I suggest that all effort is made to make this clear from the outset, to avoid much worry and the proliferation of misinformation.

Thirdly, although my head believes that flexibility is indispensable, in my heart I worry a little about the power over claimants’ lives that these regulations are giving to researchers. The Minister mentioned tailoring and tweaking. The 21st report from the Secondary Legislation Scrutiny Committee referred to the very broad nature of the powers permitted by this instrument and raised similar concerns to mine over the transparency of research design and process. Will the Minister say how we will know when researchers have made modifications to these? As the Secondary Legislation Scrutiny Committee also asked, what controls will exist on the extent of these trials?

Finally, my wholehearted support is behind this Government’s ambition to help a million universal credit claimants to increase their earnings, but is the money to embark on this vast exercise in the departmental business plan for universal credit?

[Lord German (LD)]

My Lords, I start by thanking the Minister for giving us an update on where we are with universal credit—27,000 people and 100 jobcentres. I wonder whether I can tempt him to tell us where we might be by the end of April, for example, with the number of people who are receiving universal credit and the number of jobcentres that are supplying it. It is important to note what progress we are seeing.

In-work progression, which is the target that this pilot and these regulations are trying to attach themselves to, is one of the challenges of the next five years. I believe that we will find that this area requires a great deal of attention. It is an issue that relates to a drop in unemployment, so we have to make sure that those who are in employment are given the best possible hand-up and help. I could not help having a wry smile when my noble friend referred to the way in which DWP does this sort of trialling, saying that it was unique and distinctive. I congratulate him on that because we need to find out how universal credit has been doing. As you find out, you adjust, you change and you move on, rather than having a simple blanket approach, which is a recipe for difficulties in the future.

However, there are issues, and I welcome the comments of the noble Lord, Lord Farmer. I particularly welcome what he said about the wind of change. I wonder whether this is a sign of Harold Macmillan coming back to see us again and a revitalised way of looking at social policy. I raise that as an interesting point.