Universal Credit

Lucy Powell Excerpts

Tuesday 13th March 2018 Commons Chamber

[Angela Rayner]

I absolutely agree about that. [Interruption.] Conservative Members keep saying that we are scaremongering, but it is absolute fact that under the transitional arrangements that currently apply, as they do in my constituency, which was one of the first to roll out UC, free school meals do cover those applicants who receive universal credit. The regulations will remove that right for those individuals, which is scandalous.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

My hon. Friend is making an excellent opening statement. Does she agree that the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) almost makes her point for her? He made it clear that this is about making sure that people who are currently in receipt of benefits and free school meals would not be worse off when they transition, in which case they are going to be worse off under these regulations—[Interruption.] He is making that case for her. For all the huff and puff from Conservative Members, one would have thought we would remember that this is about children and families who are living in poverty in work. We should be doing our utmost to help them, not having a semantic argument.

[Angela Rayner]

I absolutely agree with my hon. Friend.

As I was saying, people should not just take our word for it. They should look at what the Children’s Society has said about those 1 million children who will not receive free school meals if the regulations come into force.

--- Later in debate ---

[Lucy Powell (Manchester Central) (Lab/Co-op)]

I have been raising these issues in the Chamber for a number of years. Why is that? First, those we are talking about today, whether they are above or below the arbitrary thresholds that the Government are setting, are by their nature very low-income families who are struggling every day to get by. Secondly, the whole point of universal credit was to remove cliff edges from the system, so that once people reached a certain point they would not suddenly lose a number of benefits that make quite a significant difference to a “just about managing” family. Those arbitrary thresholds are taking away the very principles of that position.

I recently spoke to a number of parents in Moss Side, in my constituency, about their predicament. Those who had lost free school meals described acutely what it meant to them. Some had two, three or four children, which meant that they were losing £10 or £11 a week per child. Moreover, they were losing bus passes, the entitlement to free school uniforms and the entitlement to free school trips. What were they doing? They were not going to pay that £10 or £11 to the school for free school meals, so most of them were sending their children to school with white-bread jam sandwiches to last them for the entire day. That is not something I want to see happening in my constituency.

The need of these families has not changed; they are still on the breadline—they might be just above it, but they are still absolutely operating on the breadline. The impact of losing the two-year-old offer for these families could mean that about £54 a week is suddenly gone because of this cliff-edge. For those with children aged two this is particularly pernicious, because we are probably talking about young mums who are re-entering the labour market for the first time, and we are disincentivising them from working. The real problem with the Government’s policy is that it breaks the principle of universal credit: it is putting into the system disincentives to work more or take on higher paid work for, by their definition, low income, just-about-managing families.

My wider point is about the impact of these policies on social mobility and supporting these families to get on in life. The mothers I spoke to in Moss Side also had the school headteacher there, and she told me about the impact of the loss of free school meals on her school budget. This is a single-form entry primary school in Moss Side where the needs of the community are the same today as they have ever been. About 25 out of 30 children in year 6 are on free school meals, and coming in from nursery are about four or five; that is because of changes already coming in. We must remember that this has a huge impact on school budgets as well, because of the loss of the pupil premium.

I want to talk particularly about the developmental gap at the age of five and the impact of this particularly stringent new threshold on receiving the two-year-old offer. I fully supported the Government in bringing in the two-year-old offer for disadvantaged families, and we know from the evaluation that where that is given in a quality setting it can transform the life chances of those children, so surely we should be debating how we can extend that provision for more disadvantaged families, not reducing it.

Analysis I produced last year showed that many of the tax-free childcare offers and the three and four-year-old offer coming in disproportionately benefit better-off families: 75% of that extra money going into tax-free offers, and the three and four-year-old offer will go to the top 50% of earners in this country. Lower-income families and those on universal credit will reap very little benefit from these other offers. We are therefore going to see lack of social mobility getting entrenched, not being addressed.

I will leave everybody with the words of the Prime Minister, who said that to

“build a great meritocracy in Britain, we need to broaden our perspective and do more for the hidden disadvantaged”.

These new measures will narrow the current provisions, not broaden them.

--- Later in debate ---

[Damian Hinds]

I have heard the concerns about the timing, and I can confirm that, following the hon. Lady’s representations, we will be able to keep the voucher scheme open to new entrants for a further six months.

Tax-free childcare will mean that more people become eligible, regardless of their employer and including the self-employed for the first time. The hon. Member for Ashton-under-Lyne (Angela Rayner) raised concerns about families having to pay childcare costs up front, but I reassure her that the flexible support fund is available to help in such cases.

[Lucy Powell]

Will the Secretary of State give way on that point?

[Damian Hinds]

I am short of time, so if the hon. Lady will forgive me, I will come back to her if there is time.

Turning to free school meals, we have extended the availability of free meals since 2010, going much further than Labour. The Conservative-led coalition extended free meals to disadvantaged students in further education institutions and introduced universal infant free school meals. We are investing £26 million in a breakfast club programme over the next three years, using the soft drinks industry levy.

When universal credit was introduced, we made clear our intention to set new criteria for free school meals, as my hon. Friend the Member for Fylde (Mark Menzies) rightly pointed out. We stated that intention in our response to the Social Security Advisory Committee report on passported benefits in March 2012. We repeated it in April 2013, when we introduced a temporary measure enabling all universal credit families to receive free school meals during the early phase of universal credit, and we have repeated it again several times since, as my hon. Friend the Member for Croydon South (Chris Philp) mentioned. We are now, as we always planned, introducing new eligibility criteria to ensure that those entitlements continue to benefit those who need them the most.

Under our new regulations, we estimate that by 2022 around 50,000 more children will benefit from a free school meal compared with the previous system. The hon. Member for Washington and Sunderland West (Mrs Hodgson), who is shaking her head, asked about the methodology, as did the hon. Member for High Peak (Ruth George) and, I believe, the hon. Member for North West Durham (Laura Pidcock). We responded to the Social Security Advisory Committee on that exact point, and it put the information into the public domain.

[Lucy Powell]

Will the Secretary of State give way?

[Damian Hinds]

I cannot. No child who is receiving free meals now or who gained them during the roll-out of universal credit will lose their entitlement during the roll-out, even if family earnings rise above the threshold, as my hon. Friends the Members for Nuneaton (Mr Jones) and for Harborough (Neil O’Brien) mentioned. Once roll-out is complete, those children will be protected until the end of their phase of education—primary or secondary—as my hon. Friend the Member for Charnwood (Edward Argar) reminded us.

The protection arrangements will enable hundreds of thousands of children to continue to receive a meal during the roll-out, even if family earnings exceed the threshold. The £7,400 threshold relates to earned income, and it does not include additional incomings through universal credit. Depending on their exact circumstances, a typical family earning around our threshold would have a total annual household income of between £18,000 and £24,000.

The hon. Member for Manchester Central (Lucy Powell) said that the threshold was arbitrary. It is not arbitrary; the thresholds for these passported benefits are set at such a level as to hold the eligibility cohort steady, except that in the case of free school meals we took the decision to make it somewhat more generous than the previous system. The threshold is comparable, by the way, to that in the approach in Scotland, where there is a net earnings threshold equivalent of £7,320.

It is simply not true to say that we are introducing a cliff edge; there has always been one. The simple fact is that a child either gets a lunch or does not. A plate of food does not lend itself well to being tapered, as my hon. Friend the Member for South Cambridgeshire (Heidi Allen) has said. Some have suggested that we could convert the benefit into cash—that is true, of course—so that we could have a taper, but the whole point of free school meals is to guarantee that an individual child will receive a nutritious and healthy lunch.

Extending eligibility to all children in households on universal credit would result in around half of pupils becoming eligible. We estimate that that would cost in excess of £3 billion a year more by 2022. The additional meal costs alone, excepting the deprivation funding, would be in excess of £450 million a year—quite close to the figure mentioned by the hon. Member for Washington and Sunderland West. I reiterate that eligibility is going up, not down, as my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) said.

I am running short of time, so I will turn to the regulations on universal credit. My right hon. Friend the Secretary of State for Work and Pensions earlier outlined the changes in these regulations for UC. They include the removal of waiting days, which will put an average of £160 extra in people’s pockets and get them into the monthly routine sooner, and an additional two weeks of housing benefit to smooth the transition to universal credit. That one-off, additional, non-recoverable payment is worth an average of £233 to 2.3 million claimants over the roll-out period. Those measures form part of the £1.5 billion package of reforms that the Chancellor announced at the Budget. My hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) said that he was surprised to hear that Labour Members would be voting against those measures. I suggest that their constituents will be even more surprised.