Universal Credit

Lord Freud Excerpts

Monday 24th November 2014 Lords Chamber

[Lord McKenzie of Luton]

To ask Her Majesty’s Government how many households are in receipt of the housing element of Universal Credit.

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

The information requested is not currently available. The department published its strategy for releasing official statistics on universal credit in September 2013; officials are currently quality-assuring data for universal credit. It is not yet possible to give a date for when these statistics will become available.

[Lord McKenzie of Luton (Lab)]

I thank the Minister for his reply as far as it goes, but I am surprised that the department does not have better systems for identifying these statistics. We know that its approach to the introduction of universal credit, which is meant to be a flagship policy, is painstakingly slow. We also know that the Secretary of State has declared that it is unlikely that the target date of 2017 will now be met. The Minister is aware that universal credit can bring great hardship to vulnerable clients, which is why alternative payment arrangements have been put in place. Is the Minister able, at least, to say anything about the extent to which direct payments to landlords now operate in respect of people on the housing element of universal credit, and the extent to which those individuals can be identified early, before they build up debt arrears?

[Lord Freud]

We have put out some statistics on the level of housing arrears, which show that, right at the start, 16% of people were in arrears. That compares with 7% for JSA equivalents. In the second wave of research, that 16% figure had come down to 12%. We have put in a lot of measures to ensure that we get that figure right down and give people the support that they need to manage their finances.

[Lord German (LD)]

My Lords, universal credit is paid monthly and usually includes rent, which is quite a substantial slab of money. Can my noble friend tell us what progress he has made with the banks and credit unions to ensure that transactional bank accounts are available to people, so that they may take advantage of direct debits and standing orders?

[Lord Freud]

We have a very active programme working with the banks to ensure that they provide services for the clients who are on universal credit. An exercise is currently going through to expand the ability of credit unions to provide these kinds of facilities by giving them a common banking platform.

[Baroness Hollis of Heigham (Lab)]

My Lords, I declare an interest as chair of a housing association. More than half of tenants affected by the bedroom tax are in arrears. We now learn that the Government propose to claw back those arrears by deducting a further 20% from those tenants’ benefits. For couples, this means a full £20 to £40 deduction a week from their benefit for living in homes that we allocated to them and from which they cannot move. The Government have created the debt and now seek to solve it by sending those tenants even deeper into debt. It is shocking, and many will never recover. Do the Government not understand that we are wrecking people’s lives?

[Lord Freud]

We conducted a painstaking process of testing how people respond to paying their housing rent directly. We found that there was a three-month adjustment process until people got familiar with it. We are now ensuring that we have the right systems to help people make that adjustment into the monthly payment situation.

[Lord Farmer (Con)]

My Lords, the principles of universal credit are sound, but timings and cost to the public purse are vital considerations. Can the Minister tell us when all claimants will be on universal credit and how much it will cost to reach this point?

[Lord Freud]

In the last strategic outline business case the costs of the programme to 2023-24 were £1.8 billion. That is down from the £2.4 billion figure that we had in 2011. Under that case, we anticipate that the bulk of the exercise to transfer people on to universal credit will be completed by 2019.

[Baroness Lister of Burtersett (Lab)]

My Lords, recent research by the Joseph Rowntree Foundation, and the Social Mobility and Child Poverty Commission’s recent State of the Nation report, underline the extent to which high housing costs drive poverty among working people, their children and young people. What are the Government doing about these high housing costs?

[Lord Freud]

The poverty figures show that we are making really good progress in tackling poverty, with 600,000 fewer people in poverty through this Government. We are ensuring that housing costs are covered within universal credit and that people can take control of their lives in that way.

[The Lord Bishop of St Albans]

My Lords, the House will be aware that the Chancellor has announced that the working allowances for universal credit will be frozen until April 2018. There is a real danger, if there is no lift in those allowances—at least in line with inflation—that that will significantly reduce the real net incomes of low earners. Could the Minister tell your Lordships’ House what assessment Her Majesty’s Government have made of the impact of these measures on the level of poverty among those who are already in work, especially for those families who are earning too little to benefit from further rises in the personal tax allowances?

[Lord Freud]

The working allowances in universal credit are much greater than under the legacy system, so there is a freeze that will have a small effect. Nevertheless, the poverty impacts are to take 300,000 children out of poverty.

[Baroness Sherlock (Lab)]

My Lords, I would like to return to the question of arrears raised by my noble friend Lady Hollis. Not only are people paid universal credit once a month in arrears but that is compounded by the debts they are getting into by having to pay back some of their council tax and crucially by the bedroom tax. Has the Minister read the report of the fact that Iain Duncan Smith went to court to defend his department’s right to levy the bedroom tax on a council home whose spare room was in fact a panic room which a charity had paid to secure to protect a woman who had suffered rape, assault, stalking and death threats from her violent ex-partner? As the newspapers reported clearly, she could lose £11.65 a week or move to a home with no secure space. How can the Minister justify this?

[Lord Freud]

We have a system with the spare room subsidy where there is support at a local level through discretionary housing payment, and this is exactly the kind of case where you would expect to see that payment made.

[Lord Flight (Con)]

Can the Minister tell the House how many more people are in employment as a result of the incentives offered by universal credit?

[Lord Freud]

We have some financial incentives within universal credit to encourage people to go into work compared with the legacy system. The best and most recent data we have show that over a six-month period, 69% of people would have had some work in universal credit compared with 65% in the comparable JSA cohort.

[Lord Haskel (Lab)]

My Lords, if business improved productivity by just 1% and divided that between employer and employee, how many millions would be saved on housing benefit, much of which goes to landlords?

[Lord Freud]

The number of people claiming housing benefit has come down by more than 2% in the last year, which makes the point that for the first time in a decade housing benefit has fallen.

[Lord Forsyth of Drumlean (Con)]

My Lords, can my noble friend help me? Why does he think that the official Opposition are ignoring the considerable funds—the hundreds of millions of pounds—that have been made available to local authorities to deal with difficult bedroom tax cases? What possible motive can they have?

--- Later in debate ---

[Lord Freud]

It is very important that local areas look after the more vulnerable people, and one of the most important elements that we are introducing alongside universal credit and supplementing it is universal support delivered locally. That produces a partnership where we can get all the resources that people need to become independent and take responsibility for their own lives and get them into a place where that can be done. We have 11 formal trials of universal support going on now.

[Lord Campbell-Savours (Lab)]

My Lords, the Minister was asked by my noble friend Lady Lister about what the Government were going to do about housing costs. Does he believe that housing rents in the United Kingdom are now too high?

[Lord Freud]

Excuse me, I just missed that. The housing what were too high?

[Lord Campbell-Savours]

Rents.

[Lord Freud]

Thank you. We have borne down on rents in the local housing allowance rates and have seen rents come down—I do not know if that was as a direct result, but they have come down at the same time. I have some statistics that I will send to the noble Lord.