Oral Answers to Questions

Madeleine Moon Excerpts

Monday 13th January 2014 Commons Chamber

[Mr Duncan Smith]

I am not sure from that whether the right hon. Gentleman supports the change or not. [Interruption.] He supports it—yet again a lone figure on his side, on which I congratulate him. We have carried out a whole load of revisions and changes, making sure that we watch implementation carefully. We carry out research constantly when it comes to the effects of all of our benefit changes. This one is an overall positive rather than a negative.

[Mrs Madeleine Moon (Bridgend) (Lab)]

5. What recent assessment he has made of Capita’s timescales for processing medical assessments for personal independence payments and providing them to his Department.

[The Minister of State, Department for Work and Pensions (Mike Penning)]

As I said earlier, the end to end journey time for people claiming PIP is too long—within the DWP as well as with Capita and Atos in the hon. Lady’s constituency. More than anything else, this is to do with quality issues that we want to get right. There is no point in having a very quick journey if we get the wrong decision.

[Mrs Moon]

I thank the Minister for that reply. My constituent Mr Weaver applied for PIP in June, and Mrs Curran did so in July. They both had their assessments with Capita in August. The assessments have still not reached the DWP, which is totally unacceptable. Legitimate claims are being denied, which cannot be good money for the Government and cannot be a quality service. This company is inept, inefficient and not fit to carry out the work it is asked to do.

[Mike Penning]

I thank the hon. Lady and we will obviously look into the individual cases she mentioned. It is absolutely crucial to get it right and to get the quality right so that when benefits are claimed, those who deserve them get them and those who do not deserve them do not. Face-to-face assessment is a crucial part of this and I have said previously, that fewer than 6% of those who claimed benefit were ever assessed.

Food Banks

Madeleine Moon Excerpts

Wednesday 18th December 2013 Commons Chamber

[Paul Murphy]

Indeed, I did. I also saw that many people using the food bank were working people who simply did not have sufficient money to feed their families.

The Minister spent some time trying to decide who caused the recession, but in 2010—the year the Government came to power—more than 4,000 people in Wales got food from a food bank. In 2011, it went up to 16,000; to 36,000 in 2012; and in this year, it is estimated that 60,000 people in Wales will have to rely on food banks. That is the population of my town, Cwmbran, the fifth largest town in Wales. That is a disgraceful indictment of society and of what the Government have—or have not—done.

[Mrs Madeleine Moon (Bridgend) (Lab)]

Some people have to go to food banks because of the problems they have with their benefits. On one occasion, a constituent came to see me, having been assessed for their personal independence payment by Capita six months previously, yet had still not had that assessment passed on to the Department for Work and Pensions because of Capita’s failures. Other constituents have waited more than four months. There are serious failures in the benefit system.

[Paul Murphy]

We know that in 2010, in Wales alone, 13% of those who went to food banks did so because of problems with the welfare and benefits system—and that has gone up to 20% today. That is the reality, but there are other reasons, too. It is, of course, also a matter of electricity, gas and water prices, and the price of food has gone up dramatically over recent years. What is to be done about it? The first thing we should do is properly tackle the issue of the cost of living.

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[Jessica Morden]

My hon. Friend is right. I wish there were a DWP Minister present so that they could hear her point.

The depressing Wales-wide figures from the Trussell Trust show that, in 2010-11, it supported 4,070 individuals in Wales. This year, just from April to November, it has supported 44,756. As my right hon. Friend the Member for Torfaen (Paul Murphy) said, it expects that figure to rise to 60,000 by the end of the financial year. Those figures are from the Trussell Trust and do not include figures from the independent food banks.

The unmistakeable message that I have been told time and again is that there has been an explosion of working people using food banks. Unemployment may be down, and I definitely welcome that, but the use of food banks by working people has dramatically increased, which should tell the Government something.

Whatever the Secretary of State for Work and Pensions says, the truth is that the proportion of people using food banks as a result of benefit changes is sharply increasing. The Government have shamefully—and it is shamefully—altered the form used by Jobcentre Plus staff when referring clients for food parcels by taking off the tick box that records that they are referring them because of benefit changes. No wonder the Secretary of State can play down the fact that benefit changes are driving the increase in demand—he has stopped his staff collecting the data that prove it.

I thank all those involved in food banks for the work they do in my constituency, not least our churches, which are also running night shelters, and the street pastors. They should be praised for the work that they do. I also thank King’s church in Newport, which partners with FareShare to reduce food waste and feed people at the same time, and businesses such as Newport Bus, which has been collecting for Ravenhouse this Christmas.

[Mrs Moon]

Does my hon. Friend also wish to thank those people who are donating to the food banks? Today, my office took a phone call from someone who said that they had won a food hamper in a raffle. They cannot eat that food knowing that people are starving, so they are taking the hamper to a food bank.

[Jessica Morden]

I thank my hon. Friend for her valuable contribution. We should thank those who give to food banks.

However raucous the debate and however characteristically chippy the Minister's response, it is worth reminding ourselves about the people behind the figures. Two young boys came into a Newport food bank recently with their social worker and asked whether they could have one packet of cereal and one packet of drinking chocolate as a treat. Sad stories, real lives.

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[Hywel Williams]

The hon. Gentleman makes an eloquent point about the harshness of the current system.

Significantly, about 20% of the people who go to food banks are the working poor. They are not the scroungers and shirkers who are cited so enthusiastically by some hon. Members and by the popular newspapers.

The growth of food banks in Wales is a symptom of a much more fundamental problem: growing inequality and the failure of wages and incomes to match the increasing costs of living, particularly food inflation. That is a particularly acute problem in Wales, where gross value added in some areas is about 60% of the UK average.

[Mrs Moon]

Has the hon. Gentleman found that the working poor are finding it difficult to get basic products as well? My food bank has told me that people sometimes talk to staff quietly to ask whether they have toilet paper or sanitary products. It is not just food that people cannot get, but other expensive products.

[Hywel Williams]

The hon. Lady makes a fine point. I was at the food bank in Caernarfon recently. It provides a range of goods, and at Christmas it provides a few extras, which is very welcome.

Food banks provide a vital short-term service and they deserve our support. However, they must not be a general long-term solution for the individuals who go to them and they must not be a permanent aspect of public policy. Food banks, if we have them at all, should supplement public provision. It is astonishing and shameful that, in the second decade of the 21st century, one of the richest countries in the world cannot ensure that its people get sufficient food.

Housing Benefit

Madeleine Moon Excerpts

Tuesday 12th November 2013 Commons Chamber

[Rachel Reeves]

I say that instead of presiding over the lowest rate of house building since the 1920s, this Government should get on and build some houses.

No wonder the Trussell Trust—[Interruption.] Government Members do not want to hear about food banks, and nor does the Prime Minister, but they will hear about food banks. The Trussell Trust cites the bedroom tax as the key driver behind a threefold increase in the use of food banks since April this year. No wonder more people are turning to payday lenders and to food banks. No wonder the Samaritans are training up staff to help people left desperate and distraught by the Secretary of State’s bedroom tax. Those who do not move may end up in less suitable housing—homes without adaptations for people with disabilities, or where children have to change school or live further away from family or support networks.

[Mrs Madeleine Moon (Bridgend) (Lab)]

Is my hon. Friend aware that people who have dialysis at home, who have moved into homes with a spare bedroom specifically so that having the dialysis equipment in a sterile environment will allow them not to use hospitals, are being expected to pay bedroom tax for a room that is actually a hospital at home? This is an appalling waste of public money, because hospital care costs more.

[Rachel Reeves]

My hon. Friend is absolutely right. Hospital care costs more, but so does making adaptations to a new property, which is what will have to happen if people are moved.

People up and down the country are asking why. Why are we putting vulnerable families through this? Why are we hitting some of the hardest-pressed households in our country? Why are we hitting disabled people like this? Why did the Prime Minister introduce this policy on exactly the same day as cutting taxes for millionaires? It shows how out of touch this Prime Minister and his Government are.

The Government would like us to believe that the bedroom tax is cutting the benefits bill and dealing with under-occupancy in social housing, but it simply does not add up.

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[Jessica Morden]

I thank my hon. Friend for her intervention, and she is exactly right. The bedroom tax particularly hits people in Wales—a point to which I shall return. The policy affects proportionally more housing benefit claimants in Wales than elsewhere in the UK, with 40,000 households affected by the bedroom tax—46% of working-age social housing tenants, when the UK average is 31%, and 25,000 of those have a disabled person living in the household. These are huge figures.

A little under a year ago, social housing tenants in my constituency received their letters telling them that, thanks to this coalition Government’s changes, they would have to pay more rent or move home—that is effectively their choice. Opposition Members warned then of the terrible impact the bedroom tax would have on some of our most vulnerable families, and of the fear and uncertainty it would bring. I hope the Minister does not underestimate in any way the palpable fear and anxiety felt out there among the disabled communities and families with small children.

[Mrs Moon]

Does my hon. Friend also appreciate the humiliation and the distress caused for many people with disabilities who have been forced to claim the discretionary housing payment? They have to fill in several pages of a claim form—the claim will often last only for six weeks—detailing, for example, how often they wet the bed, how often they need the bedding changed, how often they put the heating on, and so forth. That is a personal invasion, which they found humiliating.

[Jessica Morden]

I thank my hon. Friend for that intervention. That is not the only process they have to go through, either. The cumulative effect of the Government’s different benefit changes, particularly on disabled people, makes things all the more arduous for them.

The warning from Opposition Members was that far from saving money, this policy could end up costing money. The warning was that the very notion of tenants moving to smaller homes was clearly absurd, as there were nowhere near enough smaller properties for them to move into.

Pensions Bill

Madeleine Moon Excerpts

Monday 17th June 2013 Commons Chamber

[Nigel Mills]

It is unusual for Ministers to welcome that, given my record of moving amendments, so the Minister might want to be a little careful, before he gets too excited. [Interruption.] Yes, it might spare me.

We all share the Government’s vision for pension reform. We want predictable, non-means-tested state pension provision, so we know roughly what we will receive when we retire; then we want to encourage private saving in high-quality, fair, low-cost schemes and to know what we will get for our money when we pay into such schemes and how that will convert into retirement income when we reach retirement age, whatever that might be—being 38, I dread to think what mine will be: I suspect it might begin with a 7, which seems an awfully long way off.

The Bill addresses some of those aspirations—it will make it much clearer what state pension some will get when they reach the happy age and it will improve the private pensions system—but will do nothing to improve the final part of the journey and make it clear what will happen when someone reaches that happy retirement age and is told they need to convert their pension pot into a pension income. There remains a big weakness in the system around how fair a deal someone gets when they default into the annuity their pension provider offers them—that was something the Select Committee raised in our pensions governance report. Action is needed. In my view, we should not allow a pension provider to provide an annuity to the same customer. That might be too radical a market restriction for most people, but there is a real problem if people, having saved for years, see their retirement income reduced because they do not know that they can shop around and choose their annuity.

The Bill is clear that people who will retire a good few years after 2016 will get £143 plus indexation, whatever that is, but it is less clear for those retiring in 2016 or the first few years thereafter. For them, there is a complicated calculation involving what they built up under the current scheme and how that is added to under the new one. We need to educate people about the pension they will get and what the change means. In my surgeries, I hear many concerns and fears from people who thought this was some kind of big bang—that if they retired on the new date, they would get a much bigger state pension than those retiring the day before—and did not want to miss the start date. I suspect that for many people the difference will not be huge, however, so those concerns should not be there.

[Mrs Madeleine Moon (Bridgend) (Lab)]

I appreciate that the hon. Gentleman has been honest in saying that his retirement is some way off, but many people—especially women—who thought they were approaching their retirement have now been told they must work extra years and pay more in, without feeling that they will get an awful lot extra out of it? We have to acknowledge that there will be losers. Does he agree?

[Nigel Mills]

I think we recognise that in any change some people will lose out—it was particularly difficult to explain that point to those women whose retirement age increased at the start of this Parliament—but sadly these things are necessary in our financial situation.

Universal Credit (Wales)

Madeleine Moon Excerpts

Tuesday 5th February 2013 Westminster Hall

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Sheridan. It is delightful to see that so many colleagues from across Wales have joined me here, and some of them will undoubtedly wish to intervene during my speech.

We have been repeatedly told by Ministers that universal credit would ensure that work pays, improve incentives to work, simplify the benefits system and be easy to introduce. I am afraid to say that the widespread consensus is now that it might be fine in theory, but that it will seriously backfire in practice, with serious consequences for some of my most vulnerable constituents and those of my hon. Friends throughout Wales. I applied for this debate to draw attention to my sincere worries about the potential impacts on people across Wales of what one colleague has described as a car crash waiting to happen.

[Mrs Madeleine Moon (Bridgend) (Lab)]

Is not part of the problem the whole climate of uncertainty and insecurity in which benefit claimants are living? In particular, the bedroom tax means that carers cannot have a bedroom available for night sitters, people on home dialysis cannot have a room for that purpose and, more worryingly, parents without custody of their children during the week cannot keep a room so that they can have custody of them at weekends. Should the Government not have sorted that out before introducing yet more changes?

[Jim Sheridan (in the Chair)]

Order. In anticipation of the number of interventions that may be coming, it would be acceptable if they were brief.

Atos Work Capability Assessments

Madeleine Moon Excerpts

Thursday 17th January 2013 Commons Chamber

[Mrs Madeleine Moon (Bridgend) (Lab)]

My caseworker, like those of many Members, is inundated with cases that are tragic and heart-rending. The telephone line to my office is often clogged with crying people. They often ring several times a day, as they are unable to cope with the stress that they are facing. Many have mental health problems, and are unable to cope with the paperwork. They are unsure what to do with it, and they ring me to ask for help in the most tragic and personal way.

[Meg Hillier]

My hon. Friend raises the issue of people with mental health problems. Does she agree that that is an area of great concern, along with other conditions that can fluctuate, such as HIV and AIDS? Such conditions are difficult to assess in a 15-minute interview. Does she also agree that it is the framework of the assessment that is at fault, and that Atos might have something to answer for as well?

[Mrs Moon]

It is absolutely clear that the framework of the assessment is unable to clarify realistically whether someone is able to work. The assessment is not valid for the purpose for which it was set up, unless that purpose was deliberately to deny people access to benefits.

[Kevin Brennan (Cardiff West) (Lab)]

The head of Atos was recruited from Unum in the United States. Is it not disturbing that the lieutenant governor of California has stated that Unum was operating “claims denial factories” for working men’s compensation? Does not that disturb my hon. Friend?

[Mrs Moon]

It disturbs me a great deal. Quite honestly, the lieutenant governor was right to say that, because that is what we have found in this country too.

I want briefly to describe some of the cases that I have been dealing with. I shall start with 53-year-old Mrs E, who was employed as an accounts officer. She was a very able and capable woman. She suffered a vicious sexual attack, and was diagnosed with post-traumatic stress disorder. Her health problems caused her difficulties with working, and she was forced to take redundancy. She started claiming employment and support allowance, and attended her Atos assessment. The doctor who saw her is well known to me. I have received many complaints about him. I regularly receive complaints about his rudeness, arrogance and total lack of compassion towards the people whom he is assessing. He made unprofessional remarks to Mrs E, and bluntly told her carer to shut up, saying that he did not want to hear from him.

An official complaint was made, but Mrs E was found fit for work. An appeal judge overturned the decision maker’s decision and she was placed in the support group. Three months later, she faced another Atos medical, and it was decided that she would be fit for work in six months. She was then placed in the work-related activity group. A month later, because of the stress, her mental and physical condition had deteriorated, and medical advisers told her to apply for disability living allowance. DLA was refused because of the original Atos report. When it was pointed out that the report was negative, but had been overturned on appeal, a reconsideration was requested. The DWP insisted that the information from the first Atos assessment was sound and that the only option was to appeal to the first-tier tribunal.

My constituent then faced two tribunals. We should remember that this is a lady with post-traumatic stress disorder. She faced two appeals. The first was for DLA. The decision to award the lower rate for mobility and care was backdated. Since then, another DLA application has raised the mobility and care components to the higher rate. The second appeal tribunal was for the employment and support allowance. She was placed in a support group and her benefit was backdated.

That was not the end of this lady’s trauma. Her mental health had deteriorated to the extent that she attempted to take her own life. Her carer has to remain constantly vigilant. A few months later, she received a letter saying she had been transferred back to the ESA work-related activity group from the support group. Payment for the ESA support component was stopped. Following some investigation, the DWP apologised and said that that was a random “administrative error”, but it affected the lady very badly and her mental state became even more fragile.

Despite that, incredibly, on Christmas eve last year the same “administrative error” occurred. My office was contacted, and I have to say that we were extremely angry. The additional stress was placing this lady in a suicidal position again. The application process started again, and yet again there has been an apology for an “administrative error”. This lady is being hounded by the state: there is no other way of describing it. There is no excuse for this behaviour. This is a company that is not playing fair by this country’s most vulnerable people.

[Nic Dakin (Scunthorpe) (Lab)]

Will my hon. Friend give way?

[Mrs Moon]

I am afraid I cannot; I have only a short time.

Atos received £112.8 million in 2010-11 for its DWP services. About 60% of all claims are judged fit to work; 41% of those people appeal, and 38% of those appeals are successful. Last year, appeals cost £54 million. How can that be seen as value for money? How can this be seen as evidence of a supportive and caring Government in action?

Here are my questions to the Minister. We are told that specific support staff for mental health will be provided. Are they in place? Are they aware of the trauma of post-traumatic stress disorder? Is sensitivity training available, because it has certainly not been made available to the ex-GP who works as an Atos assessor in my area? Has the DWP looked at the cost—to Members, to citizens advice bureaux and to welfare rights organisations—of fighting this iniquitous system?

Welfare Benefits Up-rating Bill

Madeleine Moon Excerpts

Tuesday 8th January 2013 Commons Chamber

[Mr Byrne]

What we need from this Government is the right combination of compassion and competence, and right now we see neither.

[Mrs Madeleine Moon (Bridgend) (Lab)]

We were told that this Bill was about fairness. How can it be a fair when a young mother in my constituency on jobseeker’s allowance is expected to live on £56.24 a week? She will lose £12 a week through the empty room tax and £9 a week in council tax. That leaves her with £35 a week to pay for heating, water and food. How is she going to survive? How can that be fair?

[Mr Byrne]

My hon. Friend is exactly right. What her constituents need is a job, but what they are not getting from the failed Work programme is any prospect at all of work.

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[Ian Mearns]

What is shocking for low-income families is the impact of VAT on their real income. Rises in VAT and other taxes of that nature have a disproportionate impact on people on lower incomes.

[Mrs Moon]

Will my hon. Friend give way?

[Ian Mearns]

I am afraid that I will not, because I need to make progress.

The shocking statistic is that the number of people experiencing in-work poverty has risen to 1.6 million. Sadly, workers are increasingly reliant on welfare to top up their low wages. The number of families receiving tax credits has risen by 50% since 2003 and 4.4 million jobs pay less than £7 an hour. We have to ask ourselves whether we want to continue to support a situation in which private employers in particular do not want to pay a living wage to the staff that they employ in order to make profits.

As the Secretary of State knows all too well, a real-terms cut will have a much greater impact on low-income households than on higher-income households because basic living costs make up a greater proportion of their income. Even when a cut is proportional to income, it is often felt more acutely by a household on a lower income, as a greater proportion of its income is spent on essentials such as food, fuel and clothing.

On Friday, The Daily Telegraph reported the managing director of Waitrose as predicting that the prices of basic food such as bread and vegetables could rise by up to 5% this year, and in the past few months utility companies have hiked up their prices—the biggest change that I have seen so far is 10.8%. How on earth are the low paid and those out of work supposed to heat their homes and feed their families if their benefits are not increased in line with inflation? Families are already having to make difficult choices between heating and eating.

Make no mistake about it, the Bill is intended to squeeze further the already squeezed. Analysis by Unison shows that in-work poverty is becoming the modern face of UK hardship. It is estimated that the freeze suggested in the Bill will cost an average family with two children more than £1,000 by 2015-16. The Chancellor may point to changes in personal tax allowances as the reasoning behind the Bill, but that will do little to offset the shortfall in the income of working families. The Child Poverty Action Group argues that a working family eligible for both housing and council tax benefit will gain only 13p a week extra—13p!—as a result of the extended personal allowances. We should remember the furore that the 20p upgrade in old-age pensions caused under the last Government, and in this case we are talking about 13p. It is a slap in the face for the working poor and their children.

The CPAG has also spoken of its grave concern about the Bill, arguing that failure to

“uprate in line with inflation will increase absolute child poverty, relative child poverty and the material deprivation”

of many children. The Bill fails any fairness test with regard to income distribution, and it fails the working poor, the job seeking, the caring and the disabled poor. It will push those at the bottom further down the ladder.

The Bill is shrouded in smoke and mirrors. The Chancellor’s choice of start date to illustrate the rise of out-of-work benefits is 2007, but if we take a longer period, for instance beginning in 1979, we can see that benefits have risen significantly less than wages. He talks about strivers and skivers, but I see something different on the ground—families scraping by in low-paid work or jumping from insecure jobs to benefits and back again. The truth, unlike what the Government keep spouting, is that the vast majority of those who rely on benefits and tax credits are either in work, have worked or will desperately be trying to get into work in the near future. They have made a contribution to society, but their families are really struggling.

Welfare to work is a two-part equation: welfare and work. Where there is no work—in many parts of the north-east there is not a great abundance of work—there must be welfare that is enough to sustain families fairly. I know that in difficult times we all have to think about ways of reducing the bills that face the Government, but let us do that in a way that is proper, productive and economically and socially beneficial. Let us do it by stimulating, not stagnating, our economy; by unlocking the huge investment potential of UK business; and by creating hundreds of thousands of real jobs, building houses and reinvigorating our infrastructure, not by punitively poisoning the minds of ordinary people and punishing the poor.

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[Dame Anne Begg (Aberdeen South) (Lab)]

I have sat through a lot of annual debates on benefits uprating, but I have never seen a turnout quite like this. Very often the number of hon. Members in the Chamber is less than double figures. I hope today’s turnout reflects the importance of the debate. The votes tonight will have a profound effect on many of the most vulnerable and poorest people in our society, whether they are in or out of work. Based on the decisions we take tonight, for some families it will not be a case of whether to eat or heat. Towards the end of the two weeks or the month when universal credit is introduced, some families might have a few days when the children get neither food nor heating, unless food banks, which are increasing, come to the rescue. We should not wish that on our society in the 21st century.

[Mrs Moon]

An additional problem is that low-income families—some working, some not—will be faced with a decision when their housing benefit is paid directly to them of whether to pay their landlord or feed their children. Does my hon. Friend accept that we are facing a potential explosion in homelessness?

[Dame Anne Begg]

I thank my hon. Friend, because she sets up my point on how the proposals undermine the Government’s flagship policy of introducing universal credit. Universal credit will create problems—she alludes to the fact that it will be paid monthly, and that housing benefit will be paid directly to individuals, who must make the decisions she describes.

One big claim for universal credit is that it will make work pay in all circumstances, but Government Members somehow cannot understand that making work pay means increasing benefits, because the majority of people who receive the benefits that will be affected by the Bill are in work. The group who are out of work and the group in work are often the same people, as my hon. Friend the Member for Westminster North (Ms Buck) has said—they move in and out of work.

The principle of universal credit is to smooth the move into work. The Government are freezing the benefits that make up universal credit statutorily for the next three years. I do not know why we are not having the normal uprating debate. There is no reason why the measure must be in the form of legislation, which makes me suspect that it is a political decision. The freezing of those benefits will tie the Government’s hands on the introduction of universal credit and could undermine it.

In spite of everything that has been said today, tax credits were a huge success. They increased the income of workers on low wages and made work pay. For the first time in at least two generations, the poverty trap was ended—I thought that it had gone for ever. There was a genuine poverty trap created by the previous Conservative Government and to all intents and purposes tax credits got rid of that. Almost everybody was better off as a result of tax credits unless they lived in a high accommodation cost area such as London or they had a large number of children. Work paid. The incentives did not always work because work did not pay enough. Through the Bill, the Government are repeating the same mistake—the incentives to move into work under universal credit will not be high enough to make work pay in all circumstances.

Credit Unions (Modernisation)

Madeleine Moon Excerpts

Tuesday 10th July 2012 Commons Chamber

[Mrs Madeleine Moon (Bridgend) (Lab)]

I declare an interest as a member of Bridgend Lifesavers credit union. Bridgend Lifesavers is a community-based credit union founded in 2000. It has gone from strength to strength, with 3,000 people benefiting from its services and an expanding network of collection points, including a high street collection shop in Bridgend town centre. Last year the union had savings of more than £1 million and had made loans of more than £500,000. I would like to put on record my admiration for the hard work of everyone connected with Bridgend Lifesavers who have made it such a success. I would also like to put on record the fact that I am the vice-chair of the all-party parliamentary group on credit unions.

This debate has come at an important time for credit unions and the financial services sector. Not a day seems to go by without another story of mis-selling, rate fixing or large bonuses, and it is little wonder that trust in banks has dropped to an all-time low. A ComRes poll at the end of June found that only 10% of people trusted bankers to tell the truth. Increasingly, people are looking for financial services that have the sense of social responsibility and the credibility that credit unions represent. Credit unions already fulfil a vital role helping people who ordinarily struggle to get a bank account or affordable credit.

With the publication of the Department for Work and Pensions feasibility report on credit union expansion, credit unions are at a crossroads. I want to use the time that I have to examine that expansion and to seek assurances from the Minister that any changes that he makes will be carefully made and considered to avoid the goose that laid the golden egg meeting an untimely and scrambled end. The feasibility report concluded that no change is not an option, and it is clear from credit unions themselves that they feel that they are not reaching their full potential.

The report picked up on the gap in the financial services market. Financial exclusion needs to be addressed urgently. Some 1.4 million people in the UK do not have a transactional bank account, but credit unions can fill that gap where banks appear unwilling to do so. Around 7 million people in the UK use high-cost credit. A survey carried out by Unite concluded that the third week of every month is rapidly becoming Wonga week, with 82% of the 350,000 respondents saying that their wages cannot last the month and 12% saying that they turn to payday loan companies to see them through to the end of the month. The House has heard frequently of the exorbitant rates of interest those companies charge and the financial hardship that that can lead to. A survey carried out by Save the Children on the costs of child care found that a third of parents in severe poverty have had to go into debt in order to meet those costs.

[Jessica Morden (Newport East) (Lab)]

Does my hon. Friend agree that it is easy to understand how child care costs can push people into debt, because for many families those costs are equal to the cost of their mortgage or rent?

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[Mrs Moon]

My hon. Friend is completely right. We must take on board the fact that those are families who want to work and who get into debt in order to continue working, because they know that continuing to work will give their children a better start in life. They need support, and credit unions can give them a better level of support.

Greater competition for the high street banks and the more widely available source of affordable credit are both things that credit unions can offer. Therefore, what should be done to nurture credit unions and ensure that they can fill the gap while achieving long-term sustainability? The main recommendations of the feasibility report can best be summarised as the need to increase efficiency, to increase revenue and to increase skills. I understand that the Government plan to take forward the report’s recommendations and that the additional earmarked investment of £38 million will be conditional on the credit union industry meeting a number of agreed milestones for collaboration, modernisation and expansion. I hope that the Minister will elaborate on how that will work in practice.

I shall look at the changes in turn. Increasing efficiency, from the point of view of greater automation, reorganisation and collaboration, makes sense. Close working among credit unions and the ability to provide a greater variety of services to a larger customer base is clearly important, but I want to sound a note of caution. Part of the appeal of credit unions is their ethos of independence. In the section, “The Way Forward”, the report recommends that the Government select the best performing credit unions, which make commitments to fulfil certain requirements. The Department for Work and Pensions has suggested that, for that to work, credit unions would need to form consortiums of 15, with a joint minimum membership of 120,000.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Lady for bringing this matter to the House. In my constituency credit unions play a vital role in local communities and deliver to the people who really cannot afford banks. Does she agree that the Government changes should take into full consideration the importance of small credit unions and what they deliver to local communities?

[Mrs Moon]

I thank the hon. Gentleman for his intervention. That is exactly where I was going in my speech. The average size of a credit union is around 8,000 members, but many fall below that, including Bridgend Lifesavers. Its membership is growing, but it is still about 3,000, so it would be excluded from the modernisation plans. In fact, it would be impossible to meet the target of 120,000 members given that we do not have that total membership across Wales. Wales is a vibrant and active country for credit unions, and I have no problem being ambitious about what they can achieve, but I would like an assurance from the Minister that smaller credit unions that provide valuable services to their communities, such as Bridgend Lifesavers, will not get lost in a stampede aimed at economies of scale. Perhaps we could hear about the measures to be introduced to protect smaller, but still valuable, credit unions. I recognise the need to increase revenue through the expansion of membership and by increasing the products available and the interest rate that credit unions are able to charge.

Demand for credit unions is certainly not a problem, as the feasibility report’s research found. Of 4,500 consumers on a low income who were contacted, 60% expressed a desire for local trusted services, such as those provided by credit unions. The crunch came when they were asked about their awareness of local credit unions, with only 13% of those surveyed being aware of the services that unions provided. That might in part be explained by the previous links required for membership, so the legislative reform order that came into force in January will, I hope, tackle that issue, and I thank the Government for taking the measure forward.

The feasibility report emphasises the need to raise consumer awareness and to develop a strong credit union brand. A national marketing campaign is needed not only to reach those on lower incomes, but to broaden the appeal of credit unions generally. In the United States and in Canada, 40% of people are members of credit unions. The credit union is not just a low-income organisation; it is active across the income spectrum.

[Damian Hinds (East Hampshire) (Con)]

Will the hon. Lady give way?

[Mrs Moon]

I will most certainly give way to the chairman of the all-party group on social mobility.

[Damian Hinds]

The hon. Lady has mentioned a couple of countries and could have also mentioned Northern Ireland. We have just heard from a colleague from Northern Ireland, where credit unions are widespread, well understood and well known, and, notwithstanding her point, which we all accept, about the benefits of small credit unions, that demonstrates the benefits of scale. If lower-cost operations are to reach out to more people, including to low-income customers, scale will have significant benefits.

[Mrs Moon]

I thank the hon. Gentleman for his intervention. Of course scale has benefits, and I recognise that, but we must not kill off small credit unions that are going to grow—and perhaps the publicity campaign will help them to grow. We must not say, “Credit unions cannot expand; we are only going to service the large ones and stick with them,” otherwise unions in countries such as Wales, where they are growing, will find themselves isolated and unable to meet the growing needs of those who want the low-cost credit that they offer.

[Tessa Munt (Wells) (LD)]

The critical thing, which the hon. Lady mentioned a moment ago, is that credit unions should not take up just those who really need the help that they offer. It is important that people with funding are able to invest in credit unions, so that there is a much wider investment base for those who can afford to place their money there, and so that unions do not just soak up the difficult situations of people in difficult circumstances.

[Mrs Moon]

The hon. Lady is right. I gave the example of 3,000 members in Bridgend Lifesavers, with a balance of £1 million and loans of £500,000. Such membership and a balance of £1 million shows commitment and what can be achieved by even small credit unions, and that is why it is important that we continue to support them and allow them to expand.

I should like the Minister to provide more details of how his Department, perhaps working with colleagues in the Treasury and in the Department for Business, Innovation and Skills, intends to address the issue of awareness. Will he commit to working with credit unions to develop a national marketing campaign?

Another way to help credit unions is by linking them to the post office network, which would help them to raise awareness and to achieve a boost in revenue. Consumer Focus, in its report “Credit where credit’s due—The provision of credit union services through post offices”, highlighted the potential value of that link-up and how it could be achieved. People trust and value the Post Office brand, and there are 12,000 post office branches—more than bank and building society branches combined—which would offer a nationwide, visible platform for credit unions and greatly increase the availability and diversity of services.

Looking at what needs to be done, the report suggests that credit unions would need to develop shared back-office functions with Post Office Ltd and shared banking platforms. Credit unions might also be required to pay a fee to Post Office Ltd. That idea has widespread support, but it is a big step for all concerned, so will the Minister elaborate on what role his and other Departments will play in facilitating it, and on the stage that has already been reached in making it a reality?

The feasibility study suggested that long-term financial sustainability could be achieved if the interest rate ceiling of 2% that credit unions can charge on loans is lifted to 3% on reducing balances. The modelling included in the study suggests that the 3% loan rate would need to apply only to loans below £1,000. The 3% rate would make credit unions more sustainable, but at the same time they would not lose one of their biggest attractions—affordability. That is important, because this is often about the small purchases of essential items such as cookers and freezers that families need. That is borne out by what Brian Rees of Bridgend Lifesavers said to me:

“A regulation for 3% maximum interest would be very helpful. As you appreciate, lending very small amounts of money is very expensive and we presently don’t cover costs below £500. 3% is nowhere near ‘a door step rate’ but it would help us to sustainability.”

I understand that the Government are planning to consult on this measure, and I hope that the Minister will listen to those concerned about the pros and cons of adopting it. Should it be decided that it offers a short-term solution, I hope that legislation can be brought forward as soon as possible. Credit unions can achieve what we want them to achieve, and they themselves want to achieve, only if they are given the capacity to do so.

Finally, I turn to the demand for credit unions to develop a broader skills base and, by extension, better qualifications for their staff and directors. The Association of British Credit Unions, which is a great supporter of the all-party group on credit unions, has identified that as a challenge to the sector. Some progress has been made, but while the feasibility report suggests that for credit unions to demonstrate that they are worthy of Government support they need to have appointed a director to work with their board, it does not offer much detail on the time scale or how it expects that to be achieved. I would be grateful if the Minister could furnish us with further details.

Credit unions offer a ready-made solution to many of the problems that we are facing, but in supporting and enabling them to grow and expand services we must not lose sight of what they stand for and their value to the communities they serve. I, and the many Members who support their local credit union, look forward to hearing the Minister tell us about the support that can ensure that these valuable community-based sources of financial aid are encouraged to grow, develop and prosper.

Oral Answers to Questions

Madeleine Moon Excerpts

Monday 25th June 2012 Commons Chamber

[Pamela Nash (Airdrie and Shotts) (Lab)]

10. How many people are waiting for appeal tribunals on the outcome of work capability assessments.

[Mrs Madeleine Moon (Bridgend) (Lab)]

14. How many people are waiting for appeal tribunals on the outcome of work capability assessments.

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

At 31 December 2011, the latest date for which data have been published, 63,500 appeals were outstanding in which the work capability assessment was a factor, down from 84,100 in October 2010. There are always a number of live appeals at the various stages of processing before being listed for a tribunal hearing.

[Chris Grayling]

I think that the hon. Lady has misunderstood the situation. There will always be people who are waiting for appeals. If they put in an appeal submission today, they will not have a tribunal hearing this afternoon. There is always a gap to allow everyone involved to prepare for the hearing itself. We are doing everything we can to reduce the backlog of appeals, as we inherited a massive backlog two years ago from the previous Government. The figures I have just set out show that we have succeeded in reducing that. We have reduced it as far as possible, but there will always be people in the pipeline waiting for appeals, because they simply do not happen on the same day as the application goes in.

[Mrs Moon]

My constituent, Mrs W, was placed in a work capability assessment group on 7 April. She appealed and waited until September when she was successful, like 40% of those who appeal. Shortly afterwards, she was recalled for a further assessment. Will the Minister consider giving work capability assessments tribunals the ability not just to assess the rightness of decisions at the time they are made but to decide when the assessments need to be made, cutting the number of people in the revolving door, waiting for appeals?

[Chris Grayling]

The hon. Lady will know that when the present system was set up by the previous Government, they built in a system of prognosis times, which set a rough estimate of the next time an assessment should be held. As I said, I have now taken steps to lengthen that period when somebody has been through an appeal, but she should be under no illusion: the system she talks about is the one set up by her own party.

Oral Answers to Questions

Madeleine Moon Excerpts

Monday 23rd January 2012 Commons Chamber

[Mr Duncan Smith]

I thank my hon. Friend for that question. She has raised an issue that has been raised by a number of people. The reason why we want to try to pay universal credit monthly is simply that when unemployed people go back to work, they sometimes have to adjust to their wages being paid monthly rather than bi-weekly, which often causes them problems. One of the reasons why they often fall out of work is that they cannot settle on that. We want to try and pay the universal credit monthly, so that it assists them. We will give every bit of assistance we can to all those who have difficulty to help them manage their budgets, which will include a new test on the way we pay housing benefit and the way it will be allocated through their bank accounts. I also give my hon. Friend this undertaking: we will have set-back proposals to make it absolutely certain that we can assist those who genuinely cannot do so to pay their relevant bills.

[Mrs Madeleine Moon (Bridgend) (Lab)]

Before Christmas it was announced that, at least initially, local authorities would have no role in the universal credit assessment. Will the Secretary of State tell me what impact that will have on those working in housing benefit departments in local authorities? Will his Department be helping with redundancy costs if large numbers of people working in housing benefit departments lose their jobs?

[Mr Duncan Smith]

The reason is that we will be talking full time, all the time, to local authorities. We receive a huge amount of information from them, so we are not talking about stand-alone assessments being made; rather, the functioning of universal credit requires that, at its best, it should be done in one location. However, we will be in constant contact with local authorities about the needs in their areas, and we will be with them all the way through in the way this is applied.