Universal Credit Bill

Lord Sikka Excerpts

2nd reading & Committee negatived & 3rd reading
Tuesday 22nd July 2025 Lords Chamber

[Lord Sikka (Lab)]

My Lords, I congratulate the noble Baroness, Lady Shawcross-Wolfson, on her excellent speech and welcome her to the House. I also look forward to my noble friend Lady Bryan of Partick’s valedictory speech. I thank her for her compassion and mentoring. When I first arrived in this House, she said, “You must faithfully follow all the signs and instructions”. The first sign I saw said “Keep left”, so I have been following that ever since.

The Bill before us is cruel. It started life as the Universal Credit and Personal Independence Payment Bill and morphed into the Universal Credit Bill. Without providing any evidence, Ministers said publicly that without cutting benefits to the disabled, the welfare system would actually collapse. Strange: no such argument is ever made when vast sums are handed out in corporate welfare. Billions of pounds have been handed out in subsidies and uncosted tax reliefs to banks, auto, steel, shipbuilding, oil, gas, biomass, water, rail, the internet and many other industries. No equity stake is acquired in return and no cost-benefit analysis is ever produced.

The Government said on 23 April 2025 that spending on welfare would be 10.6% of GDP this year, which is considerably below the OECD average. The National Institute of Economic and Social Research said earlier this year that the UK has some of the least generous welfare across OECD countries, yet here we are inflicting more harm.

The Bill still targets the disabled. There has been no assessment of its impact on the NHS, public services, local economies, families, people, and human dignity. The assumed financial savings are unlikely to materialise. I welcome the proposed £1 billion investment in employment support and a right to try but, after changes in the Commons, the cuts are still there to the amount of around £2 billion. This is a large amount and will devastate the lives of around 1.6 million disabled people by slashing the health element from £97 a week to £50 a week for those applying for universal credit after April 2026. That is a cut of £2,444 a year and will plunge millions of people into poverty. It violates any notion of equality by creating a two-tier society. Pre-April 2026 claimants will not really be safe, as their circumstances can change and they may well be classified as new claimants and lose what they are getting now.

No evidence has been provided to show that the government policy will deliver the assumed objectives, jobs and savings. The OBR will not publish its analysis until later this year. The Timms review will not begin until autumn, and we still do not have the full wording of the new eligibility criteria, and Parliament will not really be able to amend it, though it may be able to discuss it. Consultations were needed before proceeding with the Bill, but that has not been the case.

There is no shortage of money. For example, around £15 billion a year can be raised by taxing capital gains and dividends at the same rate as wages. Another £14.5 billion can be raised by standardising tax relief on all pension contributions at the basic rate of income tax, but the Government are choosing not to do that. We are all one serious illness or accident away from becoming disabled and needing benefits. None of us could live on the new level of reduced support for future claimants. The Bill removes hope and support for those who desperately need it. I regret that I cannot support the Government on this Bill.