Universal Credit

Lord Farmer Excerpts

Thursday 9th September 2021 Lords Chamber

[Lord Farmer (Con)]

My Lords, I join other noble Lords in thanking the noble Baroness, Lady Tyler, for securing this debate and focusing on impacts.

It has been said that the national insurance increases announced this week will hit the poorest and younger workers hardest, and these categories will often include UC claimants moving into employment, so not maintaining the uplift could be a double whammy for those cohorts. Can my noble friend the Minister give us an indication as to the impact of the interaction of these two measures? If a claimant is paying increased national insurance on their earned income, does that mean that there is now, effectively, an even higher taper rate and they lose more than 63p of every £1 they earn? I am sure my noble friend will put me right if I am misunderstanding how UC and NI work together.

Much has been written about a decade of underfunded reform, but the focus should be on adequately resourcing the principles of UC, which promised to make work pay. I am particularly interested in the impact on work incentives of not maintaining the uplift. Instinctively, it can be argued both ways. Has modelling been done to establish whether its retention is a marginal disincentive to moving into work or, in fact, a security blanket that keeps morale high and makes moving into work less daunting?

As the Government are rightly very exercised by job vacancies and skills shortages are very high, work incentives are of paramount importance. Strengthening these would make better use of any ongoing increase in the welfare budget than this emergency blunt instrument, which boosted the incomes of almost all claimants regardless of circumstances. If the Government decide against maintaining the uplift, they should decrease the taper rate so that it is closer to the 55% level mooted in early design of UC in 2009-10.

My noble friend Lord Freud was unable to establish properly the system of universal support to run alongside universal credit to help those who will always struggle to get into work, with all the advantages to well-being for them and their children this entails. What progress is being made to help those furthest from the labour market to overcome barriers of addiction, mental ill health, poor education and family relationship problems which a more generous basic welfare payment would barely touch?