Benefits: Reductions

Lord Farmer Excerpts

Thursday 1st November 2018 Lords Chamber

[Lord Farmer (Con)]

My Lords, I thank the noble Lord, Lord Bassam, for giving us the opportunity to talk again about the benefits that will accrue to families and society as we test, learn about and, crucially, invest our way into developing a world-class benefits system. Although the implementation of universal credit has been a bumpy ride, tellingly, civil servants and politicians from other countries want to learn how we have gone from having one of the highest levels of workless households in Europe to one of the highest levels of employment in Europe.

Any nostalgia about the tax credits system that universal credit seeks to replace ignores the very real difficulties that it presented to claimants and society. Instead of providing a safe runway into employment, it trapped many families in a shadowland of complete welfare dependency, with some saying, “I cannot afford to work”. Cliff edges and high marginal tax rates severely sapped any ambition or incentive to progress in work. Couple penalties made it financially foolish to live with—or to admit to living with—the father of one’s children. Fraudulently claiming as a single parent was incentivised to the extent that a 2006 analysis by the Institute for Fiscal Studies concluded that the Government were paying benefits to around 200,000 more lone parents than lived in the UK. Claimants found themselves in £5.86 billion of debt because of overpayment and other errors in the legacy system. Despite a sustained period of economic growth and job creation between 1992 and 2008, a sizeable group of working-age people were left behind, locked out of the benefits of prosperity. I will not labour those points because there was consensus among politicians of all colours that change was essential and that a new approach which made work pay was urgently needed.

Yet delivering that was always going to be an epic feat requiring grit and perseverance. Nick Timmins called it,

“the mother and father of all challenges”,

an earlier and less ambitious version of which Gordon Brown’s Government had decisively ducked. On the technological front, the senior responsible owner for the universal credit project in August 2015 told Civil Service World:

“If you spool the world back to 2010, we [in government] didn’t even have things like smartphones and iPads then, so it was just a very bad time, I think, to start developing an IT project”.


Reading that reminded me of the gutsiness and almost insuperable difficulties of getting a man on the moon before the end of the 1960s. Signage in the Kennedy Space Center reveals:

“A million mysteries had to be solved if we were to get astronauts to the moon and back in safety ... we had to invent everything from scratch ... with … computers the size of boxcars, slide rulers instead of calculators, and communications systems not much better than jungle drums – at least in the beginning”.


Unwavering political leadership was decisive. President Kennedy said:

“We choose to”,


do these things,

“not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one we are willing to accept, one we are unwilling to postpone, and one which we intend to win”.

He said that failure was not an option. The same could be said today about why we must collaborate to overcome the difficulties of UC.

Many on the Opposition Benches seem to want to throw in the towel, possibly for reasons of political opportunism. Perhaps they have not had first-hand experience of the calibre and dedication of work coaches like the ones I met on a recent visit to a London Jobcentre Plus. Two things were impressed upon me: first, the freedom that UC gave work coaches to do whatever it took to help someone get into work; and, secondly, how utterly demoralising it is for them and how terrifying it is for prospective claimants when the media are saturated with negativity about the new system. More money has been allocated, so the scaremongering must stop, and solutions must be found. In the debate in the other place last month, two Conservative MPs described how they had pulled together new local support partnerships to ensure that no one was left behind. Sadly, no Labour speakers described doing anything so constructive. Most just criticised without suggesting any improvements.

Now that we have an extra £l billion to help welfare claimants transfer to UC, we should all work together to ensure that this precious public money is used wisely. Therefore, I ask my noble friend the Minister to apprise the House as to how this fund will be disbursed and how she will avail herself of front-line experience and wisdom to that end.

--- Later in debate ---

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is a pleasure to follow the noble Lord, Lord Young of Norwood Green. I particularly like his idea that it would be useful to hear what the noble Lord, Lord Freud, thought about Patricia Hollis. I think that through gritted teeth, he would give a generous appreciation of the experience he had in Committee in 2012 during the passage of the Welfare Reform Act, where she took the noble Lord to pieces and put him back together again. I must say that I had something of the same treatment. In 2003, when I was chairman of a Select Committee, we went to the extreme of requiring the then Minister, Lady Hollis, who was in charge of reform of the child support systems, to give evidence during the Summer Recess. We invited her twice; she came, and got a bit fed up with all of that. At the end, it seemed that it was me, as chairman, not her, who was answering the questions. I hope the House will understand if I say that on that occasion, I was pleased to see the back of her. She was a very effective Minister, and we will miss her. I will certainly sign up for the annual debate—I want to put in an application in perpetuity to recognise her work.

This has been a valuable debate, and we can take some positives out of it. I take the view generally that we are in some difficulty, particularly in the economic context, in spite of some of the advantages of the Budget that we saw on Monday. We face uncertain times as we withdraw from Europe—or not, as the case may be. I wonder whether we are properly prepared to help vulnerable families.

The systems we have in place work perfectly well for people like me and, indeed, for other Members who took part in the debate this afternoon who were defending universal credit. I defend the architecture of universal credit; I have been arguing for a working-age benefit that is blind to work for 35 years, and that is what the architecture provides. Before 2008, the noble Lord, Lord Farmer, who has distinguished experience in this area that I respect, did valuable work constructing a report called Dynamic Benefits. However, that was a very different proposition. Because of the levels at which the taper rates and working allowances were set, it was a poverty reduction measure that did not have as many of the behavioural nonsenses we are suffering from, which were added in the implementation. The noble Baroness, Lady Lister, knows better than anybody about the ways in which the money is allocated, the periodicity of payment and some of the other flaws that will need to be ironed out—and which can be. Our Conservative colleagues do not therefore need to be defensive about the architecture of universal credit. We just want the original version, and want the money put back into it.

[Lord Farmer]

I would just like to correct the noble Lord: the Lord Farmer he was talking about was not me.

[Lord Kirkwood of Kirkhope]

I beg the noble Lord’s pardon. I had understood from the way he was making his argument that he was involved in the Centre for Social Justice work that led to—

[Lord Farmer]

I was indeed involved with the Centre for Social Justice work, but as a supporter and an encourager from outside.

[Lord Kirkwood of Kirkhope]

It sounds as if the noble Lord is being a bit defensive about the results of the work, but I will move on.

There was a theme in the debate: that all this is doable not just by the DWP, and that is correct. We need to work with local government colleagues much more; indeed, there was a very good Local Government Association briefing on this. The noble Baroness, Lady Wyld, talked about the need to put more effort into mental health; we need the Department of Health to assist with that.

The noble Baroness, Lady Warwick, spoke about housing, which is absolutely critical. We are handing huge amounts of money to private landlords at the moment, and that is destined to get worse. A recent Centre for Social Justice report suggests that we will be paying £75 billion by 2050 if we go on at current rates. That is clearly impossible. There is a welcome understanding across the House that the DWP needs to use its important influence within government to get more cross-departmental support for the development of these policies. It may seem that there is enough to do at the moment, but that is important.

I keep saying that the arguments across the House leave us talking past one another. Members of the Government, perhaps understandably, say that reasonable people should be able to work their way through the complications of applying for benefits and so on. But universal credit has some real complexities, an example being digital access. “Digital by default” is a real problem for many families. It will lessen as the system develops, because more people will be educated at school to use technology, but people are frightened. A couple of noble Lords mentioned fear; the noble Baroness, Lady Pitkeathley, for example, mentioned the real fear that people have when making applications.

The Government are saying that for people like me, should I need to apply for universal credit, it is a breeze. I know it is because I have been to the centres and listened to applications being made. The system works, and there are other advantages too. Indeed, in theory, in future nobody should miss out on benefits because take-up is accounted for under universal credit. It can be massively beneficial for people like me; but for those with big household debts, two or three credit cards that they do not know how to pay off, a disability, a lack of digital skills or family problems, it can be very difficult.

The Government need to fix this, and I guess the best vehicle for doing so is universal support. I welcome the extra £1 billion that is coming in. We will talk about that in more detail when we get the managed migration regulations, because that is where this sits. It would be helpful to get an idea of when the regulations will be coming, together with the SSAC report to which the noble Lord, Lord Shinkwin, rightly referred.

If people on the Government side are trying to defend the situation and are frightened that universal credit will be swept away, the one thing they can do is ask for more support, because it works. They got more money from the Chancellor—I did not expect that package. It was down to Conservative Members of Parliament saying, “We need to do something about this”. They now need to go back and say, “We need more put into universal support” to help the 10% to 15% of households who will really struggle to find a way through the difficulties, in addition to the sanctions that they face. There are things we need to do to guarantee the future of universal credit as a successor to the legacy benefits that the noble Lord, Lord Bassam, has rightly raised in his Motion.

Between now and next November’s comprehensive spending review, we need to put more support into universal credit so that it can be guaranteed to work. If I were to get the assurance of extra resources, I would become a stout defender—subject to dealing with the behavioural issues that still need to be fixed. I would be much more encouraged to defend the architecture of universal credit if it had a more effective system of universal support attached to it.

The noble Lord, Lord Livermore, was absolutely correct to mention the real mistake that was made. The decision to put money into tax allowance increases as opposed to unfreezing benefits was unconscionable. It was a political choice and, at this stage in the game, when we face uncertainty over Europe and everything else, flatly wrong. It was a big mistake. It was a choice that the Government made and they will be held to account for it, and rightly so.

Finally, I was encouraged by reference in the Red Book to providing better access to affordable credit. A lot of the families that I am talking about, and continue to be concerned about, are at the mercy of loan sharks day in, day out. Using assets from dormant bank accounts can help to deal with that. It is not a huge amount of money but if it works, it could be extended. I hope the Government will take that forward, because it would be a very positive move.

This has been a very good debate. Such a debate should be held annually, but we need not just to “take note” of things; we need to get them fixed.