Welfare Reform Bill

Lord McKenzie of Luton Excerpts

Tuesday 4th October 2011 Grand Committee

I hope that we will have a fairly robust debate on whether the clause should stand part and I beg to move.

[Lord McKenzie of Luton]

My Lords, I think that the noble Lord, Lord Kirkwood, has got us off to a really good start to our considerations on this important Bill. I do not want to dwell on the issues of the Room and where we are meeting. It is a matter for other channels: the usual channels. I think the Government made a mistake in putting everything in Grand Committee, but having done that I think they have worked quite hard to configure this Room so that hopefully we can have sensible debate on this important measure.

We have added our name to the noble Lord’s clause stand part debate, but let me start with his Amendment 1. We have a great deal of sympathy with this, because he is technically correct in saying that this is not a universal credit. It is not a universal benefit; it is a means-tested benefit. It is not universal in the sense that it is a substitute for all other means-tested benefits, either. Council tax sits outside it, as does the partially means-tested child benefit. Other non-means tested benefits rightly sit outside it—DLA and its replacement, the personal independence payment, in particular.

As the noble Lord said, though, “What’s in a name?”. What we are dealing with is the integration of a number of benefits through this system. I agree with what he said about the use of language and how careful we need to be. One of my questions to the Minister is: since we read in the newspapers that Secretaries of State are scurrying around Manchester and other places at the moment trying to dream up ever-more draconian conditionality to the welfare benefit system, is there anything in particular that the noble Lord anticipates bringing forward in that respect, as amendments to this Bill?

As I said at Second Reading, we always seem to end up in a place where those on benefits are benchmarked—in an adverse way—against a hard-working family who pay their taxes, not recognising that that hard-working family themselves could, next week, be availing themselves of the benefits system, because they have lost their jobs, or there has been an accident, or they have suffered ill health. We need to get away from that. I exonerate the Minister, who I have never heard adopt that language, but frankly some in his party do, pandering to the tabloids, which is, sadly, what this is about.

Universal credit is something which we, in principle, support. It covers those in work and those out of work, and therefore potentially removes the fear that entering work will cut away a support system. The prospect of one source of support rather than fragmented sources, from HMRC, DWP, and local councils, is broadly to be welcomed. The clear and significant income disregards and a common taper add to its attractions for improving work incentives. But this is not a panacea.

It is still going to be complicated, and there are problems with work incentives, for example for second earners in a couple. There are still very significant unknowns, more detail about which we will seek to elicit in the upcoming weeks, as we scrutinise the clauses in the Bill. Whether the universal credit can lay claim to making all people better off in work depends crucially, of course, on support for childcare costs. We will press for clarity on this matter, as we know others will as well.

There are gaps around passported benefits, treatment of the self-employed, and payment of rents. The SSAC, referred to in the presentation by the noble Lord, Lord Kirkwood, published a response to the White Paper on the universal credit, and highlighted issues such as, for example, whether the DWP has modelled the potential impact of second earners moving out of work. Perhaps the Minister can let us know on that issue. It makes reference to MDRs actually increasing for working households paying income tax and national insurance but which do not receive housing benefit or council tax benefit. Perhaps the Minister can also say something about the other complexities that have been pointed out about how the universal credit will deal with situations where, for example, one member of a couple is employed, the other self-employed; or a household comprising persons employed by a number of different employers.

Of course, the overriding issue is the deliverability of proposals. If the Telegraph is to be believed, Treasury officials have told Ministers that these reforms are,

“in serious danger of arriving late and billions of pounds over budget”.

Can the Minister please tell us whether a team of senior Whitehall officials and industry experts has been assigned to investigate the development of the universal credit? Is it true that the DWP rather than the MoD is now at the top of the Treasury’s risk register? I accept it might be the HMRC’s bit that is causing this to happen and not the DWP, but is it true? It seems that we are being asked to rush through a Bill where there are major gaps in how it is intended to work and concerns at the very top of government about the timing and costs of its delivery.

I refer the noble Lord to HMRC’s Improving the Operation of Pay As You Earn: Collecting Real Time Information, the summary of responses that was issued on 30 September. The ability for these systems to deliver that is crucial to the universal credit and in a number of places both employers and software providers have raised real concerns about the challenging timetable for introducing it. In particular, they say in paragraph 3.13 that:

“Of those respondents who expressed a view on the proposed timescale for the introduction of RTI, as set out in the consultation document, 75 per cent thought it unachievable. Views from those attending consultation meetings echoed this. The timetable for the introduction of universal credit means there is no flexibility in terms of the ultimate go-live date of RTI. HMRC’s priority is therefore to migrate the largest number of employments into RTI as quickly as possible—a necessity for the introduction of universal credit—whilst putting in place a migration approach which will protect the overall robustness of the system”.

We will come back to this issue with subsequent clauses in the Bill but at this juncture, at the start of our deliberations, we really ought to have an update on what is happening on deliverability in light of these particular comments and publications of HMRC.

I agree with the noble Lord, Lord Kirkwood, that this is not a perfect Bill. We will certainly have common cause with those who wish to press on some of the issues, not particularly around universal credit but some of the other issues around housing benefit and benefits caps generally, and under-occupation, which frankly I see as wicked in some respects. I hope that we can have common cause not only in having a rhetoric which we would support but actually translating that into voting to change this measure.

To conclude, I echo what the noble Lord said about thanking the Minister and the Bill team for being available on a very consistent basis so that we can actually get fully to grips with what is a very significant change to the system. I hope that in the next amendment we will open up this issue of what the universal credit should be for. Perhaps I should deal with my comments there rather than in response to this first group of amendments, but we also need to reflect on the process that everything is driven by work incentives and everybody who is on benefits lacks a motivation to work. I do not believe that to be true but I will seek to expand on that when we consider the next amendment. Having said that, if the thrust of the universal credit could be made to work and deal with the issues about which we have concerns, I think that would be a real gain for our country, but we are a long way from that and there are too many unanswered questions. I hope that during our deliberations we can get some further information on at least some of those very vital points.

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[Baroness Campbell of Surbiton]

I am sorry, my Lords, I wish to make an addition to my comments. In my eagerness to thank the noble Lord, Lord Kirkwood, I forgot two very important things. One was that I wanted to thank the Bill team and the noble Lord, Lord Freud, for all their help that they have given to me personally and to people who I have been working with in trying to get my head around this very complex Bill. I am sorry that I forgot my thank-yous.

The other is that the Committee will know that I was one of the people who complained bitterly about coming into this Room. I am afraid that I am not happy that we are here. Yes, I love this lovely desk and the fact that my PA is able to help me to drink, but three important things were forgotten. First, no one asked me what it was going to be like for me to participate in this Room. No one came to us, and that is the lack of consultation that we often complain about outside this building to local authorities. In the Disability Discrimination Act, the number one rule is that you must consult, but no one consulted me personally.

Secondly, it is a good job that I have an Olympian, the noble Baroness, Lady Grey-Thompson, next to me, because she can reach to push the button on this microphone. There is no way that I can do that. No one asked me, and I do not particularly like having to ask every time that a thought comes into my head and I wish to intervene.

Thirdly, the reason why I have that office on the Principal Floor, probably three minutes away from the Chamber, is that at any moment I may have to leave the Chamber and go to my room where I might be assisted to breathe properly. It is dangerous in this Room.

I wanted Members to think about that and remember that consulting the person who experiences impairment is the number one rule. I do not want to shame noble Lords, but I have to tell them this because it is important that we in this House remember equality for all. Sorry about that.

[Lord McKenzie of Luton]

I am very disturbed to hear what the noble Baroness, Lady Campbell, has just said about lack of consultation. In our dealings with the Whips Office we made it clear that what might be satisfactory to us would have to be also satisfactory to the noble Baroness and her colleagues. We made it clear that we could settle on an alternative room only if it had the noble Baroness’s agreement. If that has not happened, it is a real failing. Perhaps we cannot do anything about it now, but I ask the Minister to take that issue back, as we had assurances to the contrary.

[Baroness Thomas of Winchester]

My Lords, I would like to add a brief word. I hope that the Committee does not mind if I do not rise to my feet, as it would take rather a long time. I, too, am disturbed by what the noble Baroness, Lady Campbell, has said, but I think that the people who have done the work in this Room have done a terrific job and I commend them. They have worked extremely hard to make the Room as comfortable as they possibly could, and they have done a much better job than a lot of us thought they would be able to do. I am sorry that the noble Baroness, Lady Campbell, was not consulted but they have done a good job in making the Room comfortable.

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[Lord McKenzie of Luton]

On the impact of the taper rates, does the Minister agree that, if you have council tax benefit or its replacement outside the system, you simply cannot be sure what the effect of the withdrawal and taper rates will be? Can you include that benefit?

[Baroness Hollis of Heigham]

I reinforce my noble friend’s point. As every council tax taper will differ from district to district, and there are some 300 to 400 of them, it will be impossible for anyone to predict who gets what.

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[Lord Freud]

Yes. Picking up on that point from the noble Baroness, Lady Howe, one of the most complicated areas in practice is not the development of the IT system; it is the interface between the user and that system. We must develop, and are developing, a sophisticated set of gateways. There are a lot of issues to get right surrounding identity assurance, ease of use—which we are doing a lot of work on—and where you go to get access when you do not have broadband in your home or do not necessarily understand how to use programs. Getting that help right and balanced is something that we are spending a lot of time and energy on. I accept the noble Baroness’s point: that is one of the key issues to get right.

[Lord McKenzie of Luton]

The noble Lord is clearly impressively knowledgeable around all this. He said that the systems were being built in layers, and that he would be able to demonstrate to us that some of them are actually working now. Are they working on the basis of collecting real-time information for the individuals represented in those layers?

[Lord Freud]

No. I shall explain to the noble Lord, Lord McKenzie, exactly how this works. We are building a system so that certain types of people can apply and run their universal credit. That is not a small trial; that is the mainframe system equivalent. The first type is a simple claim; I think he is personified as “Tom”—I forget his surname. We have pulled in a lot of Toms and run a customer insight with them to run through how they would interrelate with the system. The next stage has been to work out how we have a joint claim. Yasmin and Liam are the two joint applicants. They are both committing as a joint claim because it is a household claim.

Noble Lords who are interested in this area—I suspect that quite a few are—will find this fascinating as we run through it. I am waving my hands to try to give the Committee an image, but I cannot do it. I much prefer to have a screen to run through things on.

I want to leave noble Lords with a reassurance that this is happening. The programme is going to time, and it is going to budget.