Universal Credit (Children)

Neil Gray Excerpts

Tuesday 10th May 2016 Commons Chamber

[Peter Heaton-Jones (North Devon) (Con)]

I echo the words of the right hon. Member for East Ham (Stephen Timms). The Backbench Business Committee has, properly, allowed this debate and he has introduced it very wisely indeed.

In my mind, there is a difficulty with the motion as it currently stands on the Order Paper: it seeks to look at universal credit in isolation. That is a problem, because what we need to consider is the entire package of measures the Government have introduced with regard to changes to benefits and very significant movements forward in seeking to tackle child poverty. We need to look at all of those measures in the round and as a whole, and not focus solely on universal credit. The package of measures we need to be thinking about are the increases in the personal tax allowance, the introduction of the national living wage and better childcare provision, which goes to the heart of what this debate seeks to address.

[Neil Gray (Airdrie and Shotts) (SNP)]

The hon. Gentleman talks about needing to take these issues in the round. Does he accept that in February this year the IFS predicted that, taking all issues in the round including planned tax and benefit reforms, child poverty will increase from 15.1% in 2015-16 to 18.3% by the end of this Parliament?

[Peter Heaton-Jones]

I am glad the hon. Gentleman mentions the IFS, because it also said that

“universal credit should make the system easier to understand, ease transitions into and out of work, and largely get rid of the most extreme disincentives to work or to earn more created by the current system.”

The IFS seems to quite like the introduction of universal credit, which has to be looked at in the round. The Government are introducing a whole package of measures. I listed some of them. The growing economy and rising employment also help.

The other issue that is not taken into account when we consider universal credit is what is sometimes referred to as the dynamic impact—a horrible bit of jargon—of universal credit. This seeks to take into account changes in individual behaviours in response to the introduction of universal credit. It is quite difficult to analyse but it means improved opportunities for people to move from welfare into work, which changes people’s behaviours. This is a vital point. Even though it is in its early stages of introduction, as pointed out already, there is significant evidence that universal credit is doing well and succeeding at ensuring that more people move off welfare and into work. The latest figures show that for every 100 people who found work under the old jobseeker’s allowance system, about 113 universal credit claimants move into a job. What matters, however, is not just the fact of moving into a job but the quality of the job and the pay, and people are actively looking to increase their hours and their earnings as well.

--- Later in debate ---

[Richard Graham]

I do not think that I have grasped the wrong end of the stick, but I may have grasped a different part of the stick, and I think it is important for all parts of the stick to be considered in this context. I will, however, respond directly to the point that the right hon. Gentleman has made.

I have sought permission from the Department for Work and Pensions and my local Jobcentre Plus to install a DWP adviser in the George Whitefield Centre—appropriately, as the right hon. Gentleman will know, named after the founder of Methodism—where there is both a food bank and a health service for the homeless. I hope that, should I be fortunate enough to receive approval from the Department and the Jobcentre Plus, the adviser, with access to a computer, will be able to see precisely where the problems are, and I hope that if, as the right hon. Gentleman suggests, the inbuilt delay is a real issue, that fact will be revealed. I put it to him gently, however, that there are a number of alternative scenarios, one of which is—to put it bluntly—that when people go to a food bank and are asked why they have done so, it is very easy for them to say, “I have had problems getting my benefits.” I hope that one of the advantages of the presence of a DWP adviser will be the ability to establish the extent to which that claim is correct, or possibly slightly exaggerated. The reality of life, I think, is that people get into financial difficulties—through no particular fault of their own—in a series of different ways, and I think that that is an aspect of the Trussell Trust feedback that has not been explored in enough detail so far.

[Neil Gray]

It is not just the Trussell Trust that is reporting circumstances in which people find themselves requiring emergency food aid from food banks. In February last year, the Poverty Alliance in Scotland reported that delays in benefits and cuts in social security support were the direct responsible contributing factor in those circumstances. Perhaps the hon. Gentleman will reflect on the fact that that is being said not just by one organisation, but by many.

[Richard Graham]

I sort of thank the hon. Gentleman for his intervention, but I do not think that he should rely on statements made by particular charities that tend to generalise. I encourage him to look into the position in his own constituency in detail, so that he can establish what the issues are.

At some point, the hon. Gentleman will also have to face the same strategic issue to which I referred the right hon. Member for East Ham and his party. If the position of the hon. Gentleman’s party is that all welfare expenditure is sacrosanct from now until the end of all days, he and his party will have to think about where they will find the revenue to fund that, and how they will do so without building up excessive debt on which interest has to be paid, which reduces the amount of money that is available to be spent on services.

If the hon. Gentleman studies—as our Select Committee has—the ratio between our country’s budget expenditure on welfare and that of some of the largest comparable nations in Europe, such as France and Germany, he will see that we spend more on welfare than they do. That is the challenge there for him and his party. He shakes his head, but reality will have to intervene one day, as my colleague Ruth Davidson in Scotland has pointed out several times.

Other Members wish to speak. Let me end by addressing one particular aspect of child poverty. There is a philosophical divide between different parties in the House on this issue, but an important part of the motion tabled by the right hon. Member for East Ham is the request for the Government

“to ensure that the number of children in poverty…falls as a result of the introduction of the new universal credit system.”

Evidence suggests that the highest poverty exit rate is strongly linked to the children of families who have gone into work, and have moved from part-time to full-time employment. I believe I am right in saying that 75% is the figure that enables the number of children referred to in the motion to be reduced. I think that that tells us that any welfare system which encourages people to work longer hours, obtain promotion and advance themselves in different jobs will have a hugely beneficial impact on the number of children in poverty, and I have no doubt that the steps taken by the Government to improve the chances of those receiving universal credit of moving up the ladder in the workforce will have a positive effect on the number of children in relative poverty.

I have made four points. First, there was the philosophical point about the strategy of welfare relative to tax revenue. Secondly, there was the point about the value of universal credit to our own constituents. Thirdly, there was my gentle challenge to some of the assumptions of the Trussell Trust about why people are going to food banks, and the role of DWP advisers in shedding more light on that issue. Finally, I drew attention to the relationship between getting into the workplace and moving on, and relative child poverty. On the basis of those points, I cannot support the motion.

[Neil Gray (Airdrie and Shotts) (SNP)]

Thank you very much for calling me, Madam Deputy Speaker. I appreciate the flexibility that you have shown this afternoon.

I congratulate the right hon. Member for East Ham (Stephen Timms) and the Backbench Business Committee on securing this debate. The right hon. Gentleman made some powerful points in his measured, brilliant and very well-researched speech.

The new Secretary of State has been keen to push the line that his Department needs to look at people, not just at statistics. I completely agree, but where is the evidence that that is happening? Where is the compassion being brought to social security policy? In the context of this debate, the Secretary of State will no doubt wish to be reminded of a quotation from Dr Seuss:

“A person’s a person, no matter how small!”

He needs to start thinking about the impact that his Department’s policies are having on children. Now, while he is relatively new to the job, we can call them inherited policies, but as he begins his tenure by marching to the defence of everything that went before him, those policies will become his own, and he will be responsible for what unfolds. He has an opportunity to make his mark on the Department and to embark on a genuine departure from what went before—as was touted when he was appointed—and that needs to start with the cuts in universal credit. As the shadow Secretary of State rightly said yesterday, if he does not make those cuts, how will he be any different from his predecessor? Perhaps the Minister could relay that, and other issues raised in the debate, to the absent Secretary of State.

The cuts that are being deferred from tax credits and lumped on to universal credit will have a very real impact on the quality of children’s lives and their long-term life chances. The cut in the work allowance—slashing the only work incentive in universal credit—will hit families and lone parents the hardest. Lone parents without housing costs will experience the largest reduction in their work allowance, from £8,800 last year to £4,764 this year—a cut of £4,000, according to the House of Commons Library. These are working families. The children of single parents are already twice as likely to risk living in poverty as those in couple families, and, according to the Child Poverty Action Group, cuts in work allowances will only exacerbate that disadvantage.

Last week the Resolution Foundation published a devastating report for the Government, which stated that under universal credit, half a million working families would be significantly worse off, even given the changes in tax allowances and the increase in the minimum wage for over-25s. According to analysis published by the Institute for Fiscal Studies in February this year, absolute child poverty is projected to increase from 15.1% in 2015-16 to 18.3% by the end of this Parliament in 2020.

[Margaret Ferrier (Rutherglen and Hamilton West) (SNP)]

Families who care for disabled children and are prevented from working for that reason are set to be particularly badly affected by the Government’s changes. Contact a Family estimates that those families will be at least £1,600 a year worse off. Does my hon. Friend agree that this change directly discriminates against such families, and that the Government should go back to the drawing board?

[Neil Gray]

I completely agree with my hon. Friend, and later in my speech I will touch on what is being done in Scotland to address some of those issues.

The Institute for Fiscal Studies says that the projected increase in child poverty is driven entirely by a sharp rise in poverty among families with three or more children, which is itself the result of planned tax and benefit reforms. Those figures are UK-wide. My constituency already has a shocking child poverty rate of 21.7%. If the rise in child poverty projected by the IFS is universally applied, Airdrie and Shotts will have a quarter, rather than a fifth, of its children living in poverty by the end of this Parliament because of this Government’s tax and social security changes. Surely it is time for the Secretary of State to see these statistics and the children behind them. One child in every four in my constituency will be in poverty if he accepts the tax and benefit changes that he has inherited.

The Child Poverty Action Group agrees that to lift families out of poverty and disadvantage, the relationship between universal credit and work must be right. It is calling for: the restoration of work allowances, particularly for single parents; a second earner allowance for couples, to support second earners to get into work without facing an immediate withdrawal of universal credit; and investment in high-quality employment support that recognises people’s individual circumstances, so that universal credit can meet its aspiration to promote in-work progression through the provision of high-quality advice, rather than through the threat of sanctions. Those proposals certainly provide food for thought.

Universal credit was supposed to involve the streamlining of a complicated system to improve work incentives, tackle poverty and reduce the scope for error and fraud. Instead, we have massive delays, huge overspends on implementation, and fundamental changes and cuts to awards that will drive more children and families into poverty. This is not what was intended, but because of this Government’s obsession with austerity at any cost, it is the reality. Universal credit has been watered down and completely undermined, especially by cutting the work allowance to ribbons.

Under the latest Scotland Bill, the newly re-elected Scottish National party Government will have power over 15% of our social security spending. [Interruption.] I hear some chuntering from across the Chamber. Although 15% will be determined in Scotland, the vast majority of social security issues will still be determined here in Westminster, which is why it is so important that we on these Benches challenge this Government whenever we can. I would prefer it if my colleagues up the road had control over all social security decisions, but the SNP is determined to use the powers that it will get to transform the service that people receive. One area of change will come when we scrap the rule that results in the removal of income for families of disabled children if their child is in hospital for 84 days. We will also increase carer’s allowance to the same level as jobseeker’s allowance, giving carers an extra £600 a year. We will put dignity and respect at the heart of the new Scottish social security agency, supported by a £200 million investment. We will also scrap the bedroom tax.

One of the key elements of today’s motion is the call for a proper impact assessment to take account of the significant cuts to the work allowance. My call to the new Secretary of State is to reassess what has gone before him, to assess the impact these cuts will have on children up and down these isles, and to set his own path of supporting people into work rather than threatening them with poverty.

[Angela Crawley (Lanark and Hamilton East) (SNP)]

When the Government announced their plans to introduce universal credit, their rationale was to lift people out of poverty and help them into work. It was billed as a mechanism to end cycles of poverty and to help parents give their children the best start in life. In 2011, the Government forecast that universal credit would lift 350,000 children out of poverty. In 2013, this was downgraded to 150,000 children. Today, the Government cannot say exactly how many children will be helped by the process. Will they tell us how many families they are actually helping through the universal credit system?

Based on estimates from the Children’s Society and the Child Poverty Action Group, it seems that the downward trend has continued to the point at which the number of children who will be helped out of poverty will be heavily outweighed by those who have been made poorer. That is deeply concerning. As an MP, I often hear from constituents who are struggling under this Government’s programme of austerity. I want their voices to be heard today, and I want the Minister to seriously consider the unintended—I am sure—negative impact that universal credit is having on many children and families.

Among the most damaging parts of this welfare reform are the eligibility criteria. From April 2017, only two children per family will be eligible for the child elements of universal credit. The child elements are intended to allow families to meet their children’s basic needs. How dare this Government discriminate against a third or fourth child? No matter how many children a family chooses to have, the Government should not discriminate against any child.

[Neil Gray]

Alongside the rape clause, which my hon. Friend the Member for Glasgow Central (Alison Thewliss) has raised repeatedly, this is one of the most disgraceful aspects of these provisions. People plan a family based on the circumstances in which they find themselves at the time. Let us take the example of two working parents. What would happen if, further down the line, having had three children, they were unable to work? The two child policy is an absolute disgrace.

[Angela Crawley]

I wholeheartedly agree with my hon. Friend. This Government have absolutely no right or reason to dictate to families how many children they ought to have, or to place a monetary value on a child’s life or someone’s livelihood.

This Government have scrapped the first child premium, worth £545 a year. That is the equivalent of the family element in tax credits, which was designed to help families with the extra cost of their first child. Obviously, this Government do not prioritise the need to give every child the best possible start in life. The Scottish Government and the First Minister have ensured that every new-born child in Scotland will receive a box that will allow the family to deliver the best possible care, health and support for their child. In what initially appears to be a benefit to low-income families, support for childcare has been increased from 70% to 80% of the cost. However, this policy will not compensate for the far greater losses families will see as a result of other changes to the benefits system.

That brings me to my final point, which relates to disabled claimants. Disabled individuals are often the worst off as a result of benefit reforms, and they are certainly the worst-off group as a result of universal credit. They have been wholly ignored in the process. At present, families with a disabled child can claim £60 per week through the disability element of child tax credits. Under universal credit, £29 per week of support will be claimed under disability additions, but according to the Government’s own estimates, this means that 100,000 disabled children stand to lose more than half their entitlement. How can the Government look at those figures and honestly justify their actions? Disabled lone parents with young carers stand to lose £58 per week as a result of the loss of the severe disability premium under universal credit. Again, this Government have failed to take those individuals into consideration. Lone parents and those under 25 are likely to lose up to £15 per week as a result of reductions in standard allowances for those groups under universal credit.

The Government must commit to fairer arrangements, especially for those most at risk. While they continue to balance the books on the backs of the poor, many more children will continue to grow up in poverty. While they continue to allow tax avoiders and big business to benefit, those who work hard to put food on the table for their loved ones will continue to lose out. When will this Government learn? The fact is that one child growing up in poverty is one too many.