Universal Credit

Lord Fink Excerpts

Thursday 16th November 2017 Lords Chamber

[Lord Fink (Con)]

My Lords, I too congratulate the noble Baroness, Lady Hollis, on securing this debate, which provides an opportunity to remind ourselves how universal credit can help its recipients. I echo some of the concerns that have been raised today.

I stress that universal credit has definitely created clear incentives to work by removing the poverty traps at all levels which in the past often made paid work uneconomic. Indeed, the existence of universal credit probably helped mitigate the unemployment rise in the wake of the last recession so that the numbers of unemployed were below all known forecasts. As others have remarked, we should remind ourselves of those years, and of what universal credit is here to replace. Before universal credit, we had a complex system that failed the very people who needed the support and opportunity the most—an incredibly complicated administrative system, which, as my noble friend Lord Farmer said, often trapped people in a cycle of vulnerability, dependency, immobility and poverty.

Since the introduction of universal credit, we have a system where work actually pays at all levels, whether part-time or full-time, compared with not working, and not just financially. I am a passionate believer in the pride and dignity that work provides, how it gives a sense of self-worth and a feeling of belonging, and how even an initially less well-paid job or a part-time job can lead to promotion or help enhance a CV, whereas a long period of unemployment blights it.

Despite hearing many examples today of individual cases where UC has caused real problems, overall since universal credit was brought in, more people are able to get work than under the previous benefit system. We know that universal credit claimants are four percentage points more likely to be in work within six months compared with people on the previous jobseeker’s allowance. Like my noble friend Lord Shinkwin, I stress that above all the system must be sustainable.

Figures show that the number of children living in workless households is at the lowest level since records began and unemployment is at the lowest level since 1975, as my noble friend Lady O’Cathain said. Furthermore, by the end of the rollout, it is estimated that universal credit will boost employment by 250,000. Behind all those statistics are hard-working people making this happen and universal credit supports them in that.

Like others, however, I wish to raise concerns with my noble friend the Minister. I acknowledge that while being paid monthly possibly helps the recipient to prepare for the monthly salary that is most common in work, and becoming more so—I see the logic of that—I am aware that people who receive universal credit are often out of work and have little or no savings to fall back on. Like many noble Lords, I would like my noble friend to explain how the Government currently mitigate the slightly longer time it takes for a claimant to receive universal credit, and whether there are any plans to improve the situation if we see more claimants experience real cash-flow problems. Furthermore, I understand that, at the time they apply, some claimants who find themselves entering universal credit will have existing rent arrears, debts and possibly payday loans. Does the Minister agree that we need to do more on personal financial education in the UK—at all levels, including schools? Are new universal credit claimants with pre-existing debts either referred to Citizens’ Advice automatically or given the information they need to get their debts down? Will they get assistance in accessing products that can help them to do this, such as IVAs or other programmes for managing debt?

While it is easy to categorise the unemployment level as a number, I try never to forget that behind every claimant count there is a human being wanting to work—to provide a better life for themselves and possibly their family. There is a human being feeling the frustration of not seeing job vacancies that fit their skills, financial needs or family commitments, and probably enduring endless interviews and the bureaucracy of repeated claims.

After years of tinkering with a failing system with so many layers and complexities, replacing it with universal credit provides the best chance to help that person back into the world of work. Therefore, despite the real issues raised—I hope the Minister can address some of them—I believe it provides the best chance of that person leading a self-fulfilled and purposeful life.