Universal Credit

Lord Freud Excerpts

Tuesday 19th July 2016 Lords Chamber

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what assessment they have made of the combined impact, to date, of the payment of universal credit monthly in arrears and the seven-day waiting period before it can be claimed.

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

I recognise the concern about impact, especially about arrears, as we discussed last week, but many claimants come to UC with final earnings to support them until their first payment and often find work quickly. Waiting days apply to those most likely to find work and various claimant support initiatives are available, including advances, dedicated work coaches and budgeting support. DWP is keeping a close eye on this area and hopes to publish data later this year.

[Baroness Lister of Burtersett (Lab)]

My Lords, in the survey of council home providers to which my noble friend Lord McKenzie referred last week, 100% of respondents cited the six-week wait for the first UC payment as a key factor in rent arrears. It is also a factor in food bank referrals. Will the Minister now, as a first step, remove the seven-day waiting period, as called for by the National Federation of ALMOS and ARCH, bearing in mind that his department’s data show that lower-paid workers are more likely to be paid weekly and not have savings to fall back on?

[Lord Freud]

I am looking at this area. The figures have to be looked at very carefully to see what they are really showing us. We are looking at a group going to UC who are changing their circumstances. The difference between what happens to them as they go on to housing benefit compared with the legacy benefits is not as great as I initially thought. But I am taking this seriously and I will look at it personally with the department to ensure that we get the right answer.

[Lord Hylton (CB)]

Will the Government publicise the available arrangements for discretionary payments and emergency payments so that those who are eligible for them do know?

[Lord Freud]

We do publicise them. In UC, we probably do not publicise the advances available enough, and I am looking at making that information more available on screen and automatic, rather than through a conversation—so that is a good point.

[Baroness Sherlock (Lab)]

You certainly do not publish them very well. In 2010-11, more than 1 million people applied for crisis loans. In the year to September 2015, that was down to 140,000 people applying for the equivalent advances.

Did the Minister see the research out today by the IFS which showed what the House has been telling him for a long time: two-thirds of the poor are now in households where somebody is in work? If those people are paid weekly, they are already poor. If they lose their job and apply for universal credit, they have to wait six weeks before they get a penny. As my noble friend said, they get nothing for the first week. Can the Minister not see that that is setting them up to fail?

[Lord Freud]

As I said, I am looking at this area. It is not as simple as some of the figures might make you think. I, too, read the IFS research with great interest. Inequality among children has fallen very steeply since the mid-1990s, most of it post the recession. Whenever the IFS says anything nice, I really appreciate it. It said that the important reason was a remarkable fall in the share of children in workless households. Indeed, we have half a million fewer since 2010.

[Lord Kirkwood of Kirkhope (LD)]

Will the Minister confirm that, if my history is right, he is the single surviving Minister since 2010 holding down the same office in government, promoting the interests of universal credit? Is this because the subject area is so complicated, or maybe because he is unpaid? Do any of the 11 pilots currently being mounted by the department address the issue raised by the noble Lord, Lord Hylton, which is important? Packages of support and advance payments are available, but this does not seem to be communicated to the people who need them most. I hope that the Minister will stay in his position for some time yet.

[Lord Freud]

I thank the noble Lord. His sums on this are right, although, along with him, I am not sure whether that is a compliment or the opposite. With the figures that we are looking at, we are disentangling legacy systems—which are pretty odd in themselves—from the new system. One fact about the very big ALMO figures is that ALMOs want rent a week in advance, so it is not surprising that a lot of people are in arrears when you compare them with housing associations, which take the rent four weeks in arrears. That is the kind of thing that I have to disentangle.

[Lord Flight (Con)]

My Lords, the issue has been raised before, but housing associations, as well as councils, are suffering major rent arrears. When the Government have sorted out the meaning of all the data, I would just ask that they do not rule out returning to providing direct payment of housing subsidies to landlords, because clearly it is a problem for housing associations if they are short of income. I add my congratulations to the Minister for remaining in seat.

[Lord Freud]

Let me be absolutely clear why we are doing this. It is of course very convenient for housing associations to be paid directly by the state, but it is incredibly inconvenient for claimants to then move from being out of work to being in work. Our whole drive is to break that barrier and get rid of all those artificial barriers to people going into work. It is something that we need to work on and get right, so that the transformation is made easily. The basic, underlying philosophy is more important than the convenience of housing associations.

[Lord Foulkes of Cumnock (Lab)]

When did the Minister last meet one of these claimants in person?

[Lord Freud]

Oh, last week.

[Lord Forsyth of Drumlean (Con)]

My Lords, given that the Prime Minister made a statement, on entering the doors of No. 10, that she would be on the side of people struggling to make ends meet, would it not be wise for the Minister to address this problem urgently with a view to finding a solution?

[Lord Freud]

To be clear, the Prime Minister, who I have worked for directly, treats this area as very important, which I am really pleased about. We are paying real attention, at speed, to sorting out these matters. As I said, one can brandish the figures around, but they do not necessarily tell you what you think they do.