Universal Credit

Lord Freud Excerpts

Tuesday 6th November 2012 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, the universal credit programme remains on schedule to launch the pathfinder in April 2013 and to go live in October 2013.

[Lord Touhig]

I regret that I do not share the Minister’s confidence in this matter but, on behalf of those who depend on benefits to survive, I sincerely hope that he will be proved right and I will be proved wrong. In Grand Committee the noble Baroness, Lady Stowell of Beeston, told me that,

“universal credit will be a digitally based process”—[Official Report, 8/10/12; col. GC377],

and confirmed that the Government intend people to claim this benefit online. However, work carried out by the noble Baroness, Lady Grey-Thompson, indicates that 8 million people in this country do not have access to a computer, and that of those, 3.9 million are disabled. What proposals do the Government have to ensure that people who are disabled and do not have access to a computer will be able to claim universal credit?

[Lord Freud]

My Lords, we did a survey on our complete claimant base and found, somewhat to our surprise, that 78% of them were already online, and, indeed, that 41% of them used online banking. Our target when we start next year is to have 50% of people going online, with others going to our other channels which support the online process. We plan to have a support and exceptions process to help the people who need support in getting their universal credit.

[Baroness Sherlock]

My Lords, is the Minister aware of the recent report of the Joseph Rowntree Foundation which showed that it will be very difficult for people to claim online because only 20% of people now do so and only 40% are ready and able? What will the Government do if people do not feel able to claim online? How far and for how long are the Government willing to extend paper applications to those who struggle?

[Lord Freud]

My Lords, I should make clear that we are not entertaining paper applications. We are looking at either face-to-face or telephone support groups. We have looked at pushing JSA online and the figures have gone up from 16% in September last year to 39% this September. We are moving people very rapidly to the online route.

[The Countess of Mar]

My Lords, the banks have shown us that computer systems are not infallible. Can the Minister tell the House what provision there is for back-up in case something goes wrong? These people are very vulnerable and cannot do without money for a long time.

[Lord Freud]

My Lords, we have a very substantial contingency prepared if, for instance, a disaster takes down our data centre—we have two data centres for that reason—and particularly if we have a cyberattack. We will have contingency built into the system to make sure that our payments systems do not go down because of these problems.

[Lord Stoneham of Droxford]

Can the Minister confirm that the Treasury is giving the fullest possible co-operation to his department on the computerisation of the universal credit system? In particular, are employers being sufficiently geared up to provide monthly pay information on their employees?

[Lord Freud]

My Lords, I am happy to confirm that the Treasury is whole-heartedly in support of this radical transformation of our welfare system. Part of the system relies on real time information through HMRC networks, and HMRC is driving ahead with a series of expanding pathfinders. It currently has 2 million employees or pensioners on the system today and is ramping it up into April and October next year.

[Lord McKenzie of Luton]

My Lords, the Minister will be aware, no doubt, of the KMPG survey undertaken recently. It concludes that:

“Moving to real-time information (RTI) reporting in which employers send payroll information to HMRC on or before every payday instead of after the end of the tax year is an enormous change. In the main, the larger employers are putting plans in place, or at least thinking about it. But many small and medium-sized businesses are likely to be blissfully unaware of this radical change”.

Is that not a cause for concern?

[Lord Freud]

My Lords, there is naturally a programme to get employers on board. HMRC has launched a major campaign—for instance, writing to 1.4 million employers so that they are ready in time. Even in the KPMG report, 75% of employers were aware of the change over and that was before this campaign got going.

[Baroness Armstrong of Hill Top]

Is the Minister content that people currently being moved from one benefit to another frequently have to wait three, four or more weeks because the system cannot cope? How is that meant to give us confidence in what the Minister and the department are proposing for next year?

[Lord Freud]

The noble Baroness is absolutely right on this particular problem. It is one of the reasons we are sweeping away the existing system—it is simply too complicated for people to operate. The real difference in the new welfare system is that we do not have a distinction between out-of-work benefits and in-work tax credits. You do not have to jump from one system to the other when you move category. You stay on the same system and do not have to suffer awful delays.

[Baroness Browning]

Will my noble friend confirm that people claiming disability benefits will be reassured that when the Government calculate the minimum amount they need to live on, the cost of maintaining a computer and purchasing internet access will now be part of that computation?

--- Later in debate ---

[Lord Freud]

My Lords, that is not how the benefits system is built up. It is not, and has not been ever under any Government, built up on the basis of needs. It is based on a particular set of payments for people in different categories. That will continue. In fact, under universal credit the gross amount for people who are unemployed will remain more or less unchanged as a direct result. Clearly people can get access to computers. They do not necessarily have to have them at home.

[Lord Bach]

My Lords, does the Minister accept that when universal credit comes in, an enormous number of wrong decisions are bound to be made? Is he aware that just when universal credit comes in, legal aid for legal help with benefit law will just have been abolished? Are those two facts merely coincidental, or is it a calculated act of policy, whose aim is to punish the vulnerable and the poorest?

[Lord Freud]

My Lords, when you turn what can be 200 pages of applications for the current suite of benefits into one very much more simplified system, clearly you will dramatically reduce the number of errors that people will make. I therefore think that the complaint is about the existing system and not about the system we are planning.