Universal Credit: North-West

Marie Rimmer Excerpts

Wednesday 13th January 2016 Westminster Hall

[Marie Rimmer (St Helens South and Whiston) (Lab)]

I beg to move,

That this House has considered the effect of the roll-out of universal credit in the North West.

It is a pleasure to serve under your chairmanship, Mr Nuttall. This is the first Westminster Hall debate that I have secured, and I will endeavour to observe the correct procedure. I am pleased to have secured this debate on such a critical subject for my constituents in St Helens South and Whiston and for people across north-west England.

I am sure that no hon. Member would disagree that the recent debate on changes to tax credits has been one of the most important in this Session. Following pressure from Members on both sides of the Commons, the Lords and the public at large asked the Government to think again. The Chancellor announced in the autumn statement that planned changes to tax credits had been scrapped, saying:

“I have listened to the concerns. I hear and understand them. Because I have been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether. Tax credits are being phased out anyway as we introduce universal credit.”—[Official Report, 25 November 2015; Vol. 602, c. 1360.]

However, for many people in the north-west of England the change to universal credit is a reality. The huge changes to our social security system have been trialled with people in the north-west.

Simply because of where they happen to live, many people in my constituency and neighbouring constituencies face dramatic drops in income from April 2016. For 77,378 people in the north-west, or 53% of the 155,000 currently in receipt of universal credit, this is a deeply worrying time. Some 51,000 of those people are in employment, and any of them experiencing changes that warrant a fresh application are seriously concerned. That issue of reduced work allowance is at the forefront of the minds of my constituents and the constituents of many other Members. I urge the Minister to take that away and think again.

The Office for Budget Responsibility expects the universal credit case load to be 330,000 in 2016-17, and many of those claimants will be in the north-west as those who get into work go on to universal credit. If families move from tax credits as part of their managed migration, they will be eligible for transitional protection until such time as their universal credit award catches up or the family experiences significant change to their circumstances. Transitional protection will apply only to families moved over through managed migration. Details on transitional protection have not yet been announced, and I ask for transitional protection to be put on a legal footing.

We know from the House of Commons Library that there will be no transitional protection for lone parents aged 25 or over with two children and no housing costs who are working full time—35 hours a week—on the minimum wage in 2015-16 or on the Government’s national living wage in 2016-17. Such a family will lose £2,384 in 2016-17. The same family with the housing element of universal credit will lose £309, and a disabled family with no housing costs will lose £3,000. Many families will face drops in income of between £2,000 and £3,000. That is the effect of these cuts on those whose circumstances have changed and warrant a fresh application.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

Does my hon. Friend agree that, with cuts to universal credit already being planned, there will be greater demand for transitional funding when current tax credit claimants are migrated on to universal credit?

[Marie Rimmer]

Yes, there will. How can it be right that anyone should be subject to a great injustice based on a postcode lottery determined by arbitrary decisions and the serial failings of the Department for Work and Pensions in delivering the programmes thus far? We have all heard the arguments on tax credits, and Members on both sides of the House were in agreement. Surely the change of terminology to universal credit from tax credit does not justify or warrant these cuts. It is simply indefensible that some people should be cast aside in this incompetent administrative experiment.

We have experienced other issues during the roll-out of universal credit. It would be unreasonable to assume that such a large scheme could be implemented without hiccups and a certain level of teething problems. The Government were forced to slow down the roll-out of the programme dramatically compared with their original aim. The OBR forecast in March 2013 that there would be 6.1 million claimants, but it is now expected that 330,000 people will receive universal credit during 2016-17. However, the problems that we have experienced in the north-west go well beyond what could be put down to normal problems that can be ironed out as the system beds in.

A range of administrative issues have had a terrible impact on people in receipt of universal credit. Many of the issues were highlighted in a report by Citizens Advice published in the summer of 2015. That report, “Waiting for Credit,” was drawn from 16 citizens advice bureaux, the majority of them in the north-west, including St Helens CAB. It detailed a range of issues faced by people claiming universal credit and by those trying to access it. For instance, universal credit is paid monthly in arrears. Following a new claim, the aim is for the claimant to be paid within five weeks—that is a total of nine weeks. The time lag causes claimants huge short-term financial difficulties, even when that aim is adhered to. However, the report found that 30% of claimants had to wait even longer.

[Graham Evans (Weaver Vale) (Con)]

I am grateful to the hon. Lady for securing this important debate. She mentioned that people are paid monthly in arrears. Does that not apply to everybody who works for a living and pays taxes, which is what ultimately pays for the welfare?

--- Later in debate ---

[Marie Rimmer]

It can take five weeks for people on universal credit to be paid—that is the Government’s aim. If the hon. Gentleman listened to my point, he would know that the report found that 30% of claimants had to wait even longer than the nine-week total. Those people suffer from income deprivation, which is why they are eligible for universal credit and why they are different from those in normal, well-paid work.

The report found that many claimants faced continuing difficulties in getting the right amount, even when their claim had been processed. Basic administrative problems, such as being asked repeatedly for the same documentary evidence, were cited.

[Fiona Bruce (Congleton) (Con)]

The hon. Lady talks about administrative problems, but was not the key problem when we had a Labour Government that many people were left languishing on welfare and given no help at all to find work, some for as long as 10 years? Is that not the key difference from what we now have under this Government? Hundreds of thousands of people are now being supported into work. Is that not better for them, their families and their communities, and for the income that their households earn?

[Marie Rimmer]

No, I do not agree. People knew what was coming and knew that the funds were available. There are 155,000 people on universal credit now, and I am talking about the problems that they are experiencing now. For most people, not getting paid on time will cause at least some level of difficulty. For people on universal credit, not getting paid can be a catastrophe that makes it impossible to manage everyday living and responsibilities such as heating their home, eating, or clothing their children. Increased numbers of people are in rent arrears.

In my experience, there have been other cases of people facing great hardship through the incompetence of the programme so far. Basic work with different agencies has not taken place. For example, one of my constituents was previously in receipt of jobseeker’s allowance and was subsequently moved on to universal credit. Upon going to the dentist he required treatment, which was free under the NHS. When he was filling in the usual form, he was advised to tick the box marked “income-based jobseeker’s allowance”, as there was no box for universal credit. Subsequently, he was billed and pursued by the NHS Business Services Authority and threatened with county court action for a false declaration. If that is the level of co-operation between different agencies at this stage, what hope is there for the future?

I must highlight the DWP’s use of sanctions in the case of universal credit. It has thus far been largely concentrated on those who are on jobseeker’s allowance or employment and support allowance. We have all heard of the cases of people who have had their benefits stopped, often for absurdly spurious reasons such as selling poppies or not searching hard enough for jobs on Christmas day—that is true. We have come across many tragic cases of constituents who are literally starving and unable to turn on their heating because they have no money. Sanctions are sometimes imposed for the crime of arriving only a few minutes late for a jobcentre appointment following a hospital appointment.

There is no confidence in the current sanctions regime. It is both incompetent and brutal. There needs to be a full and independent review to restore some kind of confidence in the whole system. It is therefore completely irresponsible to expand the use of sanctions under universal credit to claimants in work.

Conditionality of benefits is being trialled for some of the in-work elements of universal credit. The New Policy Institute published a report into sanctions last year, which said:

“The expansion of conditionality under Universal Credit could see a substantial increase in sanctions: if sanctioning occurred at the same rate as for JSA claimants, then the number could almost double, with an additional 600,000 sanctions.”

It is surely inconceivable that people in work could be left in such a situation because of a Government policy that is supposed to support them for doing the right thing, but that is what will happen unless the Government think again.

To say the least, there has not been a smooth transition to universal credit for people in the north-west region. I do not have enough time to outline the range of problems that we have faced as a result of being the guinea-pig region for the Secretary of State for Work and Pensions.

[Mary Robinson (Cheadle) (Con)]

Does the hon. Lady not agree that behind the roll-out of universal credit is the desire to help working families, to get people back into work and to fulfil the aspirations that people have for their lives and their families, and that it would be much better for us to support that aspiration, support universal credit and iron out all the operational difficulties that she has highlighted?

[Marie Rimmer]

Universal credit was supposed to simplify the benefits system and increase incentives to work. It has not simplified the benefits system. People have to wait longer, and very often the assessments that they receive are wrong. How does it incentivise people to work if they are subjected to cuts that they would not have been subjected to previously? We have experienced neither benefits being simplified nor incentives to work being increased.

The cuts to the work allowance will destroy the basis of the new system and any incentive or encouragement to work. The Minister said that no one would lose a penny, but now the Government are saying that people should work for three to four hours more a week—200 hours more a year—to be no better off. How does anyone find three to four hours more a week for an adviser to help them when they are in full-time employment anyway?

This change will hit the people who most need help. I urge the Government to stop, think and implement something that will work. They should think again before pursuing these devastating cuts, and, importantly, they should put transitional protection on a legal footing. Until someone’s earnings reach the universal credit work allowance scheme limit, their transitional protection should be put on a legal basis. That is what I ask for.

--- Later in debate ---

[Marie Rimmer]

I am deeply disappointed that the Employment Minister has not taken the debate seriously. Does she not accept that the language used by the Chancellor and indeed the Prime Minister is unacceptable? The trouble is, their words are at odds with the outcomes of the Government’s policies experienced by people in this country. She has not accepted that significant changes will remove people from the transitional protection arrangements. She should look at the Library briefing.

I ask the Minister to stop and think again. I ask her not to implement the cuts to work allowances. She should examine and address the real problems experienced out there in the pilot areas, as outlined so eloquently today.

The cuts in the work allowances remove the incentive to work. Transitional protection is not secure, because it is removed if one person leaves the household. There is more inequality and the dividing line is widening. The experience of people in our communities is worsening. There are examples of that in the report commissioned by the Minister’s Government, produced just a couple of weeks ago. She should read that report.

I ask the Minister to take seriously what is being experienced out there in the community and not to make the mess even worse. We are trying to help to improve roll-out across the country. She must examine and address the inequality and outcomes in the pilot areas before that. She should stop and address the problems, and not cut work allowances. Otherwise, there will surely be an outcry right across the country.

Motion lapsed (Standing Order No. 10(6)).