Universal Credit

Lord Freud Excerpts

Tuesday 7th July 2015 Lords Chamber

[Lord Leigh of Hurley]

To ask Her Majesty’s Government what is their assessment of the experience of those claiming Universal Credit.

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

For those who are now claiming universal credit, the experience is a positive one. Work is clearly incentivised and as a result claimants look for work more actively, find work more quickly, stay in work longer and earn more. The system is simpler and easier to understand for claimants, those who advise them and departmental staff.

[Lord Leigh of Hurley (Con)]

I thank my noble friend the Minister for that Answer. What steps has he taken to protect the most vulnerable people encompassed by the system and those people who will be encompassed by it in the rollout?

[Lord Freud]

Clearly, as we roll out universal credit in the years to come, we will be pulling in people who are more vulnerable than the groups we are currently pulling in. We are looking to support them in a number of ways. That is one of the reasons why we are doing this careful rollout with a test-and-learn strategy. But the specific things we are looking at in this area are help with personal budgeting support and the development of universal support delivered locally, where we are in partnership with local authorities throughout the country. We are trialling that and the results will inform the future rollout.

[Lord Rooker (Lab)]

Is it not also true that the system is simpler to understand for cybercriminals? Given the fact that universal credit is going to be such a large percentage of government spending, what preparations are the Government taking to make sure that this system is clear and safe from cyberatttack?

[Lord Freud]

The noble Lord is absolutely right that this is potentially a major target for cybercriminals. We have made an enormous effort in developing the digital system, which is a two-way system, unlike the live system that we are currently rolling out across the country. We are making sure that that is safe from cybercriminals, and the first group of people are looking at security operations, because it is not a question of just building a system; you have to maintain it with a big team to make sure that nothing of that nature is going on.

[Lord Kirkwood of Kirkhope (LD)]

Will the Minister confirm that when this House enacted the Welfare Reform Act 2012, the planning assumption was that up to 1 million households would now be receiving universal credit? Will he acknowledge that actually the number of households receiving universal credit is just over 50,000? Will he also accept that that means that lots of families are being denied useful help month by month and the delay is therefore important? Will he undertake to talk to his business manager friends on the Government Front Bench to try to find ways of regularly updating the House over the next 18 months? The delays in the introduction of universal credit are now causing real grief within low-income households.

[Lord Freud]

One of my purposes today is to find a forum where I can update noble Lords in this Chamber about what is happening in a somewhat more sensible atmosphere than is perhaps seen elsewhere in the Palace of Westminster. On the point about timing we have reset this programme, as I am sure all noble Lords here well remember, and will not be going on to the rather sharp upgrades in the volumes that we were initially looking at. We are now designing it in such a way that we will test different groups and make sure that we roll it out sensibly. That was what the reset was about and, interestingly, it is exactly what the NAO and MPA are saying is the way to roll out big programmes.

[The Lord Bishop of Chester]

My Lords, in his Answer the Minister referred to universal credit as incentivising people to work. Can he give a bit more detail on just what that incentivisation involves? What is the typical marginal effective tax rate for someone who is on universal credit, given that I read recently that it can be more than 70%?

[Lord Freud]

The marginal rate—the rate at which one withdraws benefit—is 65%. In practice, among the incentive effects are that all the constraints about taking temporary jobs or trying part-time jobs have disappeared, as have some of the constraints against people who may be disabled with fluctuating conditions. They would not normally dare take on a job because if their condition came back, they would have to restart the process of getting on benefits. Because universal credit is both an out-of-work and in-work benefit, it means that there is no risk element to being in work.

[The Countess of Mar (CB)]

My Lords, the Minister will no doubt have seen and heard increasing criticism of tax credits as a way of supporting profit-making companies which should be paying proper wages to their staff but are bad employers. What are Her Majesty’s Government doing to reduce the number of people claiming tax credits and incentivise employers to pay proper wages to their staff, so that they do not need to claim tax credits?

[Lord Freud]

My Lords, it is a bad day to answer that question. The real point is that as we move from the combination of the benefit and tax credit systems into one universal credit system, the incentives will be restructured to encourage people to work their way down the taper.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the Minister for wanting to update us—in fact, he sent me a lovely letter last week telling me how well universal credit was going—but the point made by the noble Lord, Lord Kirkwood, was that we were expecting 1 million people to be on it by last year. In fact, in two years’ time there should be 7 million people on it. So if the Minister wants to update us, given that there are currently just 65,000 people getting universal credit, will he not follow the advice of the National Audit Office and tackle the secrecy surrounding the programme? In particular, will he agree to publish the full business case for universal credit and a proper plan with milestones, so that we can judge it and reassure people how their money has been spent and when universal credit will be rolled out? He will know that his good friend the Prime Minister has said that sunlight is the best disinfectant. Is it not time to throw open the windows of DWP and let some light in?

[Lord Freud]

We have completed the strategic outline business case and will be doing the outline business case this summer. We have actually put out quite a lot of figures, in particular on the amount that this programme is costing, which is down from the original £2.4 billion to £1.8 billion. The letter which I sent to the noble Baroness and various others, and which is available in the Library, tries to deal with the main changes going on in this programme. It reflects my determination that this House will be kept informed of developments as they come up. I have made a commitment to do that and I will do that.