Universal Credit Roll-out

Neil Coyle Excerpts

Wednesday 18th October 2017 Commons Chamber

[Mr Duncan Smith]

I recognise that time is limited, so I will limit the number of times I give way.

Universal credit is not just about getting people into work; it is actually about changing lives so that those people are ready and better able to enter work. Why are there monthly payments? The very simple answer is that over 80% and rising of all work is paid monthly, and the figure will soon be close to 90%. That means that if people are not ready, able and prepared to pay bills and deal with their money in monthly periods, they will never survive in the world of work, as has happened to many people crashing out of work.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

I will give way to other Members in a minute, but let me make a second point. When it comes to housing, why do we want people to pay their rent, rather than always have it paid for them directly? There is a simple answer. All too often, housing associations and local authorities receive the money directly, but then do very little for the tenants. They often know very little about their tenants, and they quite often care even less about their lives. The result is that many tenants run up arrears because nobody bothers to get involved.

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[Mr Duncan Smith]

It is not a theory, but I will come on to that in a minute. The right hon. Gentleman and I have had plenty of conversations and discussions about the structure of this, and I want to take him up on that point.

I want to make the point, which is not often referred to by Labour Members, that the whole nature of the roll-out was deliberately set so as not to repeat the grave mistakes made when they rolled out tax credits and other benefit changes.

[Neil Coyle]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

No, because I am conscious that others want to speak, but I will come back to the hon. Gentleman in a minute.

I recall that my surgery was full of people who, under the tax credit changes, found they had no money at all. When Labour rolled out tax credits in a big bang, over 750,000 people ended up with no money at all. Since then, the thresholds have had to be raised dramatically to get money to those people.

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[Mr Duncan Smith]

I am grateful to my right hon. Friend, who has borne the years better than me. However, I will do anything for a kind look—[Laughter.] Particularly from my right hon. Friend.

It is interesting that, in the past 24 hours, the Joseph Rowntree Foundation has made the following statement:

“Universal credit has the potential to dramatically improve the welfare system, which is fragmented, difficult to navigate and can trap people in poverty.”

It went on to say that the system will help people

“transition into work and will respond better to people’s changing circumstances.”

I agree. It would have been nice if the Opposition had started their debate by being clear and positive about how and why universal credit can change lives.

The point about test, learn and rectify is that it does exactly that. My right hon. Friend the Secretary of State made many points in his excellent speech about the changes that are already beginning to happen. For example, some of the rent arrears are beginning to come down and the portal will help enormously with that.

However, I ask my right hon. Friend about universal support, which is the critical other bit of universal credit that no one has mentioned. It allows us to pick up the pieces around universal credit and deal with them on a human basis. Universal credit flags up when somebody has a debt problem and when they are running into arrears. Universal support is vital to work directly with them, using councils, jobcentres and all the other agencies, and hub up around them to help them change their lives on the basis of knowledge about how to pay their bills, their banking facilities and their debts. I ask for reassurance in the winding-up speech that Ministers will put in the extra effort, focus—and money, when necessary—to ensure that universal support rolls out successfully alongside universal credit. That is critical.

[Neil Coyle]

The right hon. Gentleman seems to acknowledge that universal credit has not worked for everyone, so does he agree that it has been almost as bad for some of those affected as online reviews of his novel, “The Devil’s Tune”? Comments include: “frighteningly bad”, “rubbish”, “utter drivel” and “hilariously awful—an outstanding compendium of bottomgravy”.

[Mr Duncan Smith]

I thought that was a reference to the hon. Gentleman’s speaking ability in the House.

Universal credit is a huge driver for positive change that, as the Joseph Rowntree Foundation said, will not just get people into work quicker, but help us identify those in deep difficulty and change their lives. That is the critical element that I hope will unite the House on what universal credit is all about.

We should not stall universal credit because doing so would damage it. Changes need to be made, and the problems that have been discovered need to be rectified as we move forward. The way that the system is being run is therefore right.

I direct my right hon. Friend the Secretary of State to some of my earlier comments. As I said, I hope that the Chancellor will look again the way in which financing for the work allowances has been reduced. I would like that to be changed. My right hon. Friend made a very good point when he said that we keep what needs changing constantly under review. The issue around waiting days is critical—I know that he will consider that and see if the evidence stacks up for whether changing that would make a major difference.

I congratulate my right hon. Friend on moving swiftly to ensure, as was always the intention, that jobcentre staff can pay out the advances on the day or within the week and, more than that, notify every would-be recipient of universal credit that they are eligible to receive them. That will dramatically change the position of many who have found themselves in difficulty because of the monthly wait.

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[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

The roll-out of universal credit affects more than 5,000 of my constituents, as Southwark has been one of the trial authorities for “full service area” and has suffered all the consequences as a result. It is fair to say that it has been a disaster for some of those involved: the individuals left waiting 12 weeks-plus in many cases; the 1,242 Southwark Council tenants facing eviction-level arears owing to universal credit delays. Only 11% of council tenants are on universal credit, but it accounts for 40% of all arrears—over £5 million. To cite the comparator that the Secretary of State seemed to struggle with: the average account balance for people on housing benefit is £8 in credit; the average universal credit claimant is now £1,178 in arrears.

It is equally damaging for some other landlords. Leathermarket JMB is absolutely brilliant and has done a huge amount of work to support people through the process, despite being denied information and access to the landlord portal at the beginning. Its average tenant not on universal credit is £73 in credit, whereas those on universal credit have arrears of £648 on average. Jobcentre Plus staff know that the system cannot cope and that the IT system is too fragile and inflexible and does not reflect things such as childcare costs or fluctuating incomes.

As for the voluntary sector, according to the food banks and Citizens Advice Southwark, the number of people coming through their doors has gone through the roof. Among the last tranche of people to whom universal credit was extended—[Interruption.] The Minister is disagreeing. We have had this discussion elsewhere. I will send him a letter about it rather than get into it now. Following the extension of universal credit to parents, the number of children using Southwark Pecan food bank tripled. That is not uplifting—the word credited to the hon. Member for North East Somerset (Mr Rees-Mogg)—but shameful.

[Ms Buck]

We have heard from Government Members about the advantages of bringing all the benefits together into a single system, and there are indeed benefits of simplification, but is not the downside exactly as my hon. Friend says—that when something goes wrong in one part of the system, it brings about a potential catastrophe right across the system, including the potential loss of people’s homes?

[Neil Coyle]

My hon. Friend is absolutely right.

The Government stressed again today that they put a lot of faith in advance payments, but those cannot cover full rent costs. We found out this morning that the new guidance for Jobcentre Plus was only sent out this week, demonstrating perhaps that the Government were more afraid of their Back Benchers in today’s debate than they were concerned to address the underlying problems. We have just had a spat about the landlord portal. It is still not fixed. The Government claim it is, and there is some faster information sharing, but there is no evidence of an impact on cutting delays, inaccurate payments or overall arrears levels. The Government acknowledge that 20% of social landlords will never be included in the landlord portal—and that is before we look at the private rented sector.

There are other solutions that have been put to the Government not just recently but for months and years. We need to end the insistence that only the claimant can confirm rents. There is no point having “trusted partner” status for landlords and then ignoring them when they say that rent is owed. We need to remove the seven-day wait period for housing costs and introduce a transitional period of rent payment for those coming from housing benefit—rents do not change just because DWP decides to force someone on to a different programme. We should also backdate housing costs. All these issues have been on the table, but the Government have ignored them.

The Government also need to improve real-time information collection. We know that DWP and Her Majesty’s Revenue and Customs have now set up a “late, missing and incorrect” joint initiative, thanks to information shared by my right hon. Friend the Member for East Ham (Stephen Timms), but the Department acknowledges that that does not address the system defects. The Government are treating the symptoms not the cause of the problems. Today is an opportunity to pause and address those underlying problems, not to push out universal credit even further, thereby increasing debt, poverty, arrears, evictions, food bank use and homelessness.

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[Rishi Sunak]

I am sure that the hon. Lady was here and heard the Secretary of State make the point that the calls that have been made were all to local rate numbers. It is not right to say that they were premium rate numbers. As of today, those calls have been made free for all claimants, although they were offered the opportunity to be called back for free if the call charge was difficult. I am aware that the average wait time is two minutes, and of course a wait time of an hour is unacceptable. I am sure Ministers have heard that and will be doing everything they can to ensure that everyone across the country benefits from a prompt and cheap response.

At the same time as simplifying the system, universal credit humanises our bureaucracy by recognising that those who need our help do not have exactly the same needs. Instead of a faceless homogeneity, for the first time personalised work coaches can compassionately take into account the specific needs of each individual and their specific circumstances, tailoring the approach to them and ensuring that they get the specific help that they need.

[Neil Coyle]

How simplified, fair and supportive does the hon. Gentleman think it is for the 116,000 working disabled parents who are set to lose £40 a week from the disability income guarantee?

[Rishi Sunak]

I cannot say that I recognise that figure, because £700 million more was made available in the last set of universal credit reforms, all of which was directed at the most vulnerable in our society.

[Neil Coyle]

Will the hon. Gentleman give way again?

[Rishi Sunak]

No, I will carry on, given the number of people who want to speak.

Compassion alone is not enough. The effectiveness of our welfare system should be properly judged by the number of lives that it transforms, and that transformation comes from well-paid work. Universal credit ends the well-documented problem of single parents effectively working for free if they want to work for more than 16 hours. Universal credit ensures that all work truly pays, and it is working. Compared with the system that it replaces, claimants spend twice as much time actively looking for work and, for every 100 claimants who found employment under the old system, 113 will find employment under universal credit. In reality, the lives of more than 250,000 people will be transformed over the course of the roll-out through having a decent job and the opportunity to build a stake in our society.

Finally, universal credit is fair to the people who pay for it. In Britain today, we spend around twice as much on working-age welfare as we do on education. To put it another way, for every £1 that the taxpayer sends to the NHS, they also send £1 to the working-age welfare bill. Given the sums involved, I make no apology for speaking up for those who ask me, “Is this money well spent?”

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[Luke Hall (Thornbury and Yate) (Con)]

I am grateful to have a chance to speak in a debate that has had well-informed contributions from Members on both sides of the House. Rather than going over all the arguments we have heard so far, I want to talk about a couple of personal examples I encountered in my previous career in retail, which show why this reform is so important in creating a system where it does pay to work. Retail is an industry where there are inflexible working hours and unpredictable amounts of overtime are often available; it is often dependent on the demand for the products in the store and so on.

Let me give a couple of examples that I saw during my time as a store manager in Lidl in my constituency: almost 10 years. As happens in many discount retailers, we often worked with a skeleton crew in the store—often as few as 12 members of staff. In such a situation, if one or two staff are limited to working 16 hours, it has a big knock-on impact. It does not just affect the individual who struggles to work the overtime, even though they want to; it has knock-on impacts for the business and means salaried employees, who might not be paid any overtime, still have to work late into the night because of the reduced flexibility that the current system offers. That is clearly not what it was designed to do, but it is one unintended detrimental consequence for the business and other employees.

I wish to make one other point about the unintended consequence of the current system for people who want to work more than 16 hours but are prevented from doing so. What they often do in these situations is end up hiding the hours that they work, through moving around holiday pay in the payroll system and even, as happens much more regularly than we might think, through store managers agreeing to pay other employees in the store; the money is received into their bank account and they then pay their friend, who can actually work the overtime but refrains from doing so because of the 16-hour limit. Another point to make on that is that the people who end up willing to be part of those trades are younger and often get paid by the retail business at a lower wage because of that. They therefore end up passing across the lower wage to the person who would work or lose out on money themselves because they transfer across to somebody else from the post-tax income.

One other point about the UC system is that because it offers support to people through the work coach system, it helps a lot of people in industries such as retail who are under-confident about the progress they can make in that role. When I started as a shelf stacker in Lidl at 18, I was lucky enough to have parents who pushed me to keep progressing through the ranks. A lot of people who are under-confident and do not have that support do not get that sort of help and encouragement to step up through the business. Often we get people who are reliable employees—

[Neil Coyle]

I am struggling to follow the point, because one of the biggest challenges of UC is that those with fluctuating incomes struggle to get a consistent payment in order to pay their arrears. Although the hon. Gentleman may have been successful in retail, he is going to struggle to sell this particular turkey to employees in my constituency.

[Luke Hall]

As I say, my experience for many years has been of a hugely detrimental experience for people who try to work over the 16 hours if they are pushed to do so. So I do not accept the point, because I think the work coaches genuinely help people with their confidence in order to move forward. I have seen real-life experiences of that in Tesco and Aldi in my constituency, where I have spoken to employees who receive that sort of support.

In the short time I have left, I should say that I am encouraged by the Secretary of State’s announcement of the cancellation of the helpline fees. That is surely a simple and right change to make so that people on low incomes who are struggling to find work do not have to pay those charges. I am pleased by the Secretary of State’s assurance that we will not move faster than we should, in order to be sure that the system can take into account any difficulties in moving forward. I look forward to supporting a system that is helping people to move into work faster and to stay in work for longer. Universal credit is helping more people to move into work.