Universal Credit

Mark Harper Excerpts

Wednesday 17th October 2018 Commons Chamber

[Mr Mark Harper (Forest of Dean) (Con)]

I want to start my remarks by noting the presence of my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), whose decision to drive through this policy was very far-sighted. He was motivated by a desire to make the benefit system fundamentally focus on enabling people to get into work and to make sure that work pays. I think that is incredibly important, and I will say more about that later in my remarks.

I suspect that many of the Members who will speak in the debate will compare the situation under universal credit with some mythical universe of perfection where there are no problems. I was first elected to the House in 2005, in the aftermath of the introduction of tax credits. They had been introduced with a big bang, which was a disaster. Nearly half the recipients were paid the wrong amount of money—nearly £2,000,000,000 was paid in error. I had constituents who had been reassured over and over again that the money was theirs to spend, but then Her Majesty’s Revenue and Customs came to take it away. I had constituents in tears at my surgery. Let us not pretend that the legacy benefit system is perfect, because that is not what we are comparing universal credit with; we are comparing it with a legacy benefit system that is flawed and needs to be improved.

[Ruth George (High Peak) (Lab)]

Does the right hon. Gentleman not agree that the problems with tax credit overpayments resulted from a low excess income level, which was then raised by the Labour Government to £5,000 a year, meaning that we did not get overpayments? The previous Government reduced it back to £1,000, so we are again seeing overpayments because people earn more. That is the problem: we had a Government that did listen and learn, and now we have one that will not.

[Mr Harper]

I was in the House at the time, and I am afraid that the Government were pushed into action and threw huge amounts of taxpayers’ money around in a way that did not target the problem.

[Several hon. Members rose—]

--- Later in debate ---

[Mr Harper]

No, I have made that point and want now to move on to the design of the system.

For me, the biggest advantage of the universal credit system is that it gets rid of the hours caps on what people can earn and the reduction in the withdrawal of benefit. The hon. Member for Airdrie and Shotts (Neil Gray), who speaks for the Scottish National party, talked about taper rates and the reduction of benefit as people earn money. He is right about that, but what he forgets to say is that under the legacy benefit system that withdrawal of benefit could be up to 90%. It meant that it was not worth people—[Interruption.]

[Hannah Bardell (Livingston) (SNP)]

Will the right hon. Gentleman give way?

[Mr Harper]

We do not have very much time to speak. I am afraid the SNP Front Bencher took up a huge amount of time, so I am not going to take any more interventions from the SNP. He spoke for longer than the official Opposition.

We have reduced the effective tax rate for people on benefits from up to 90% to 63%. It was 65% to start off with and we were able to reduce that.

The second important point is that for many people on benefits who had hours caps, jobs had to be designed not around the needs of businesses or individuals, but around the needs of the benefit system. My experience when I was a Minister in the Department for Work and Pensions was of meeting businesses that designed jobs around the needs of their business. However, when they took on a fantastic employee who did a great job and then wanted to increase their hours and offer that person increased opportunities to earn a living, that person had to say, “I’m terribly sorry. I can’t take that promotion or those hours because it will put at risk my benefits and I will not be able to guarantee a roof over our head for my children.” That has changed and that is a radical improvement.

[Heidi Allen]

For the record, I was one of those employers, and I got very frustrated that I could not give more hours to people working for me. On the taper rate, the situation is better than it was. Given the choice, I would restore the taper rate to 50%, where it was originally designed to be. Does my right hon. Friend agree that if we are going to have to choose wisely where to spend money, we should pump money into work allowances for those claimants most adversely affected? That is where we should focus money on in this Budget.

[Mr Harper]

I agree with my hon. Friend that if the Chancellor is able to find some money—I always think it is very good to not try to write the Chancellor’s Budget in advance—the work allowances are an area to prioritise. I know that that is what my right hon. Friend the Member for Chingford and Woodford Green thinks, too. I am sure the Chancellor will have heard the call in the letter that he wrote and in the debate today from my hon. Friend. Getting rid of the hours caps is really important. It means that jobs can be better focused on individuals and that we give people the opportunity to get into work, progress in work, and be able to earn for their families.

The final point I want to make in the one and a half minutes I have left—I will not take any more interventions, because it takes time away from other Members—is on the experience of constituents. I still get constituents writing to me about universal credit—of course I do. But in the past year, since we rolled out universal credit in my constituency, I get about half the number I once did. I now get about half the number of problems that I used to get with the legacy benefit system.

I also want to take this opportunity—I hope the Secretary of State can take this back to the Department—to say that of course when one is rolling out a benefit system to millions of people there will be errors, but the experience of my constituency staff is that when we raise those issues with the Department it looks at them properly and we get considered, detailed responses to solve them for my constituents. The members of staff in the Department are very focused on doing their best for our constituents. I certainly had the experience—I have heard the Minister of State say this as well—from when I was in the Department of frontline staff saying that the introduction of universal credit was the first time they felt they could do what they came to work at the Department for, which is to help constituents get into work, earn more money and be able to provide for their families. That is a fantastic thing and I urge the Secretary of State to continue to roll out the benefit in a careful way.

--- Later in debate ---

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

I am pleased to be called to speak in the debate and to be given yet another opportunity to voice my full-hearted support for the universal credit policy. I also warn against some of the voices that we have heard from the Opposition Benches today and from outside this Chamber who have called for universal credit to be scrapped, not least the voice of the shadow Chancellor. We have heard today that that may now be the official policy of the Labour party. That is risky, taking us back to the days when Labour left office. We must never forget that, in 2010, the number of households in which no one worked almost doubled.

I have the privilege of being the chairman of the all-party group for youth employment. Each month, we look at the youth employment statistics—the number of people in work and out of work. We do that because the statistics are important but, of course, what is far more important is the lives of the young people that are transformed as they move into work and are given their first opportunity on the jobs ladder.

[Mr Harper]

My hon. Friend makes an important point. [Interruption.] If Opposition Members will be quiet, I can ask my short intervention. That will leave more time for them to speak. If they keep hectoring, it will take longer.

Will my hon. Friend confirm that, if we were to go back to the legacy system, what we would effectively be doing, given the withdrawal rates, is increasing the rate of tax on those young people going back into work?

[Michael Tomlinson]

I am grateful to my right hon. Friend for his intervention. I am sorry that he received the welcome that he did from Opposition Members because he makes a powerful point. Seeing young people’s prospects turned around is one of the greatest privileges of being the chairman of the all-party group. Those prospects will be put at risk if we wind back the clock and return to the legacy system—a system that disincentivised young people and, in fact, people of all ages from getting back into work. There was a marginal equivalent tax rate in excess of 90% and the 16-hour rule effectively disincentivised people of all ages, including young people, from getting back into work.

My hon. Friend the Member for Plymouth, Moor View (Johnny Mercer) made a powerful point about the compassion of Members on the Conservative Benches. The hon. Member for Redcar (Anna Turley) said that this policy was cruel. There is nothing cruel about encouraging those who can work to get into work, just as there is nothing compassionate about trapping people in benefits. This is a progressive policy. It should be welcomed on both sides of the Chamber.

Earlier, my hon. Friend the Member for Cheltenham (Alex Chalk) said that he had gone to Jobcentre Plus and seen the difference that the policy was making for his constituents. My hon. Friend the Member for St Austell and Newquay (Steve Double) made exactly the same point. When we go into our jobcentres, we see the opportunity and positivity from the work coaches, who see that they can now do the job that they wanted to do when they went into it. This policy should be supported.

We have heard from the Employment Minister—I want him to confirm this in his response—that this policy helps people to get into work faster than under the legacy system. It means that, when they are in work, they stay in work longer, they have the potential to earn more and their progression is greater. I would welcome the Minister repeating that in his closing remarks. I invite Members on both sides of the House to support universal credit and to oppose the motion.