Universal Credit

Lord Henley Excerpts

Thursday 9th March 2017 Lords Chamber

[Baroness Sherlock]

To ask Her Majesty’s Government what assessment they have made of the impact on claimants of the time taken between applying for Universal Credit and receiving payments.

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

My Lords, the universal credit assessment period and payment structure is a fundamental part of its design, reducing welfare dependency by mirroring the world of work. Safeguards are in place to help the minority of claimants who are in genuine need to transition to universal credit. This includes advances and budgeting support. We continue to work closely with landlords, local authorities and other organisations to ensure claimants are supported.

[Baroness Sherlock (Lab)]

My Lords, if only it were that simple. In 2013 the Government introduced a rule that when you first claim benefit you are not entitled to any money for the first seven days. The problem is that universal credit is paid monthly in arrears so it means you get no money at all for six weeks. That does not sound very long, but the typical family in social housing has only £200 in savings and some people are in debt. Social landlords are now saying that tenants are getting into big arrears and people are turning to payday lenders and even loan sharks. Even the noble Lord, Lord Freud, recently told the Work and Pensions Select Committee that the seven-day waiting period should be dropped. Please can the Minister not be complacent about this. Will he go back to his department, look again at the evidence and please take action before anyone else is pushed into debt?

[Lord Henley]

My Lords, I repeat what I said in my original Answer. It is a fundamental part of the design. That argument was put forward by my noble friend Lord Freud during the passage of the Bill and was debated at great length. We recognise that this does not necessarily suit everyone. That is why I again made clear in the second part of my Answer that there are safeguards in place. We introduced universal credit advances for new claimants. Claimants can apply for an advance immediately if they are in need and can receive up to 50% of their indicative award soon afterwards. To go back to the original point, it is important to make sure that we mirror the world of work where 75% of employees are paid monthly.

[The Lord Bishop of Oxford]

My Lords, in the last three months I have visited a large number of food banks across the diocese of Oxford in seemingly affluent communities, building on my experience of food banks in the diocese of Sheffield. All have underlined to me that the most common reason why people access food banks is delay in accessing welfare payments. It is clear from the Government’s figures that too few people are aware of, or receiving, the emergency payments intended for them. Will the Minister please outline what steps the Government are taking to improve communication of and access to short-term benefit advances for existing benefits and to ensure that lessons learned from this are applied to the operation of universal credit?

[Lord Henley]

My Lords, the right reverend Prelate is right to draw attention to the problems some people have in knowing how the system works. He will find that how work coaches explain the administration of universal credit to people coming to them is completely different from how it used to operate. I recommend that the right reverend Prelate takes an opportunity to visit one of his local jobcentres to see how it works in practice. He might find that things have moved on a great deal since, say, his time in the diocese of Sheffield. If he wishes to take up my offer, I will be more than happy to make the arrangements.

[Lord McKenzie of Luton (Lab)]

My Lords, is it not the case that it is not just the architecture of universal credit that is creating problems but its administration, as the Select Committee in the other place determined? I understand that, when asked about the sometimes fractious relationship between the DWP and the Treasury over universal credit, the noble Lord’s predecessor said that,

“there were times when one’s view about the Treasury was totally unprintable”.

Does the current Minister have any such inhibitions?

--- Later in debate ---

[Lord Henley]

My Lords, we have all on occasions had moments when we have had doubts about what goes on in the Treasury, but I shall not go into that at the moment. I shall go back to what the noble Lord said about the administration of the benefit. From my experience some 25 years ago in the old Department of Social Security, and seeing how things are operating now in the DWP with universal credit, I think that there is a very real change taking place. It is important that noble Lords get a look at what the work coaches are doing and how they are getting this over to claimants who are coming to them. The offer that I made to the right reverend Prelate is one that I repeat to the noble Lord.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, it is a fundamental design of universal credit that people have to wait a month for their benefits to mirror what happens in real life, but that is not actually what is happening. Many families are experiencing delays of up to 12 weeks in the payment of universal credit, forcing them to use food banks and borrow from loan sharks. I have heard what the Minister says about the mechanism in place to prevent it happening, but is he aware that it is just not happening?

[Lord Henley]

My Lords, we were grateful for the support of the Liberal Party as part of the coalition Government in the passage of the Bill and in reaching that appropriate design, whereby we were looking for something that mirrors the world of work. That is what we are doing. That is why we also built in, as I made clear in my original Answer, the safeguards that we have. That is why, for example, I have stressed that there are universal credit advances for certain individuals who are having problems coping with that four-week waiting period.

[Baroness Hollis of Heigham (Lab)]

My Lords, I am sure that all of us in this House want universal credit to work, but it is not. There have been pilot schemes showing how people are being plunged into debt through no fault of their own. There are three simple administrative changes, as my noble friend on the Front Bench mentioned, that would transform the easy delivery of UC and prevent people spiralling into deep debt from which many can never recover. The first is to get rid of the seven-day waiting period; the second is to pay people fortnightly as well as monthly in advance, if they so wish; and the third is to pay housing benefit, if tenants so wish, direct to the landlord. Those three things together would transform the ability of people who are not particularly sophisticated about the benefit system—why should they be?—and give them the opportunity to get money that will help them back into the labour market, as we all want, and not have a lifetime of debt hanging over them.

[Lord Henley]

My Lords, I am very grateful that the noble Baroness offers support for universal credit. Like her, we wish to see it work, which is why, as my noble friend Lord Freud always made clear, we want to see a very slow rollout of universal credit. The noble Baroness, Lady Hollis, will be aware just how slow that rollout has been—deliberately so, before the noble Baroness, Lady Sherlock, giggles too much—so that we can learn as this goes along. I do not necessarily accept the three points that the noble Baroness made, but they can be taken into account as we continue with that rollout as it accelerates over the coming year.