Universal Credit: North-West

Nigel Evans Excerpts

Wednesday 13th January 2016 Westminster Hall

[Yvonne Fovargue (Makerfield) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Nuttall. I congratulate my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) on the eloquent way in which she put the concerns of her constituents—indeed, all our constituents—about universal credit, particularly the changes to the working allowance, which will disadvantage working people. That bears saying once more. Such people are taxpayers. There are not two groups—people who pay tax and people who get benefits—because people move in and out. They pay tax and they deserve support, but they will lose money. Some 20,000 people working full time in my constituency will lose money by 2020. That is appalling.

However, as I represent a pathfinder authority, I want to move on to the difficulties caused by the universal credit roll-out and the lessons we can learn to make sure that it goes more smoothly in the rest of the country. Call me cynical, but I worked in the Citizens Advice Bureau from 1986 and I saw the change from supplementary benefit to income support. We now have universal credit. The aim was always to simplify, not to make things more complicated. The basic fact is that people’s lives are not simple. Lives are complicated and a system has to be devised that deals with the complications and issues that people have at different times of their lives. Certain problems with universal credit have been highlighted in the roll-out, such as the mismatch in budgeting periods and the six-week universal credit waiting period. I take issue with what the hon. Member for Weaver Vale (Graham Evans) said about everyone who is in work being paid monthly. In fact, only half of low-paid workers are paid monthly. Many are paid weekly or fortnightly, so they do not have a cushion to rely on when they first claim universal credit. Anyone who is paid weekly will have one week’s money to manage on for five or six weeks.

There is some difficulty in claiming advance payments, and people are loth to do so. We have seen a rise in debt of 42% over the past six months. People go to payday lenders and suchlike to cover that period of time. There are other delays, without the additional delays in receiving payments. According to the Citizens Advice report, three in 10 have experienced a delay of more than a week beyond the standard five weeks. One in 10 wait more than nine weeks and some wait four months, owing to administrative problems. I accept that things go wrong, but we can look at what happens when things go wrong and at how we can improve that for people.

Confusion about the council tax reduction needs to be looked at, but the major effect of delayed payments has been the increased use of food banks. My local food bank, the Brick, has reported that the majority of people visit because of sanctions and waiting for universal credit—that includes people who are in work. That is a key finding of the survey, which found that 80% have difficulty paying essential household bills such as rent and utilities during these periods. Wigan and Leigh Homes has said that rent arrears have gone up since universal credit came in. People do not realise that they are getting all their money, which is another issue. Many people have been pushed into debt simply because of universal credit.

My local citizens advice bureau reports a much greater level of debt among universal credit claimants compared with the claimants of the past legacy benefits. Some 63% of people say that they have difficulty buying food and feeding their families—a basic human need—which means that the rise in food banks is related in some way to universal credit. I do not think that that can be denied.

I remember claiming a benefit when my husband walked out on me and I had a young child. The whole situation was appalling. I went to the Benefits Agency and felt pretty bad at having to claim benefits. If I had had to go to a food bank as well to feed my family, how would that have incentivised me at that particular period in time to seek work? I was fortunate. I managed to find work within three months, but if I had had to rely on a food bank and wonder where the next meal was coming from for me and my daughter, I am not sure I would have been able to concentrate as much on finding work.

A claimant in my constituency went to my local CAB because they were sanctioned for hundreds of days—not a short period—because they were passed backwards and forwards between jobseeker’s allowance and employment and support allowance. Both teams said my constituent was not eligible for benefit. Ultimately, that person received £4,000 in backdated benefits, and universal credit was put back into regular payment. It is very nice that they got £4,000 in backdated benefits, but how on earth did they manage to feed their family during the time when they were owed £4,000 by the Government?

We need a way to resolve such problems. I would like a universal credit claimant champion, as recommended by Citizens Advice—someone who can look at difficult cases and take responsibility for them. Part of the problem is the fact that no one takes responsibility and people are passed back and to. I do not know about other hon. Members, but I have certainly seen an increase in the number of people coming to my surgeries about universal credit problems since we became a pathfinder. They have to go to their MP because we have a helpline, but advice agencies should have a dedicated helpline. I want to plead for extra funding for advice agencies. Since the changes to legal aid in 2010 when welfare benefits were no longer seen as a legally aidable necessity, less advice has been available from such agencies. Indeed, welfare benefits specialists are having to find other work. We are losing our expertise.

We should have a review before the full roll-out to make sure that when things go wrong, they are quickly resolved and we do not get into a situation in which people are paid huge sums of money backdated, but wonder how they live in the meantime.

The helpline has an 0345 number, which is charged at a fairly high rate on prepaid mobile phones. Constituents have told me that they have run out of credit using their mobile phones to ring an 0345 number, because they have been passed back and to. As I have said before, we need a local number. There should be a freephone number. There should be more phone lines available in offices. Freephone numbers should be available so that people can use the few phone boxes that are available to ring the universal credit number.

[Mr Nigel Evans (Ribble Valley) (Con)]

I fully accept what the hon. Lady says. It is absolutely right that we should have a system whereby people are not penalised for phoning to get information or assistance. Perhaps a system should be set up where the person is able to use a freephone number. If not, perhaps they could send an email and be called back free of charge. I do not believe people should be penalised.

[Yvonne Fovargue]

I agree, but, as for sending emails, the local authority did a survey to see how many people in Wigan use the internet regularly and found that 30% have never accessed or even looked at the internet. We need to think about those people. When we look at digital by default as a way of claiming, we need to provide more help for people to claim in other ways and not penalise them with a delay.

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[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to see a fellow north-west MP in the Chair for this important debate, Mr Nuttall. I congratulate my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) on securing the debate, and indeed on the impressive work she has done since being elected to Parliament. St Helens is a place with similar issues to my borough, Tameside, so it is excellent that she is raising them.

My hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) is also present. She, too, represents Tameside, which was a universal credit pathfinder area, so we were one of the first parts of the country to experience some of the problems related to it. No matter what political perspective a person has going into the debate on welfare rights and the welfare system, it is important to listen to relevant experience, where it exists, of how universal credit has functioned so far. I should say at the outset that I completely support the goal of simplifying our welfare system—I do not think anyone in this country would not want that.

Like many Members, I use the Child Poverty Action Group handbook to help constituents when they come to me with problems. The handbook is sometimes referred to as the bible of welfare rights; indeed, it is the same size and written in a similar font as the Bible. That indicates the complexity of the system, so of course people should be trying to simplify it. However, as my hon. Friend the Member for Makerfield (Yvonne Fovargue) said, we cannot get away from the reality that many people lead complex lives and have complex needs. The system must function in a way that gives them the support they need.

A number of the issues that come up at my constituency surgery that I wanted to raise have already been mentioned, but they are so important that I want to reiterate why they are key to making the system work properly. The first one is the first payment that people get. In my experience, there are immediate problems for people when they try to access universal credit because of how the system is designed. It is not a teething problem with the roll-out, but a structural flaw in how universal credit has been created. A lot of people are immediately put into a position where they struggle to afford food and heating. That simply does not seem to tally with the goal of supporting people into and out of the workplace. Instead of giving them a professional and efficient service when they need it, it often robs them of their dignity and puts them into crisis.

Like other Members present, at times of my life I have had to access support from the welfare system, particularly the tax credit system, which is almost always the case for those who have children at quite a young age. It did not lead me into a life of welfare dependency—it arguably led me to a worse life, as I ended up here in the House of Commons. Nevertheless, that is an important point, because so much of the Government’s rhetoric is based on the assumption that there are two sets of people in the country: an underclass of welfare recipients who must be punished and whipped back into the workplace, and everyone else who suffers from having to pay for the system. If that is the Government’s mindset going into the designing of a welfare benefit, the welfare system will simply never be designed in an appropriate fashion to meet the objectives of the people who have been described in this debate.

[Mr Nigel Evans]

I am glad that the hon. Gentleman has brought up the question of whether that is what the Government intend, because the answer is clearly no. The greatest dignity that we can give to anyone is the dignity of work and employment. That is the main thrust of what the Government want to see. Getting people off benefits and into full-time work will provide them with dignity and give their children a role model to follow.

[Jonathan Reynolds]

I do not doubt the hon. Gentleman’s motivation. Before the debate we exchanged some comments about that sense of there being a group of taxpayers paying for the welfare system and a group of people in receipt of welfare benefits. That is not the way to design a welfare system. We cannot do it in a way that divides the country so simply into those arbitrary classifications. Indeed, if we do that, it is impossible to design an effective system.

I mentioned the issues relating to the first universal credit payment. People have to wait a long time, because it is designed to be paid five to six weeks in arrears. As the hon. Member for Weaver Vale (Graham Evans) said in an intervention, the assumption is that they are in the workplace and receiving a monthly salary in arrears, so they will have that support before receiving universal credit. I say this completely genuinely: that is not how the economy of my constituency works. A great many people are still paid weekly or fortnightly. A lot of people have different levels of income week by week because of zero-hours contracts. That does not seem to have been considered in the level of detail required to design how and when people will receive the support that they need.

Delays occur in any bureaucratic system, but there is an even bigger structural flaw in universal credit that I have heard about several times in my constituency surgeries. If someone applies for universal credit on the wrong day—perhaps one or two days before they really “should” apply; in other words, when they have lost their job but before they have received their final pay cheque from their former employer—the system becomes disastrous for them. We must bear in mind that a lot of people, on finding out that they are going to be made redundant, would go to the jobcentre to look at the available support. If they apply for universal credit but receive a further pay cheque from their employer, they will wait not five to six weeks but 10 to 11. That is an enormous problem that must be looked at. If that happens—if someone has to know exactly when to apply for the support to which they are entitled—it will go far beyond the current level of complexity. That would have to be sorted out before any national roll-out.

I have raised those points because we have to find a way to get a supportive system that copes with people going into and out of the workplace—regular or temporary work—in a way that does not completely reset the system and cause all kinds of problems if they then go back into work. That is what I mean when I say that we should not split the country with an arbitrary classification of those in work and those out of work and receiving welfare benefits.

Whenever problems with universal credit are raised, the Government say that advance payments can sort out all the problems, whether with housing arrears, heating or food. That is the first question I ask people who come to see me with problems with universal credit, and a lot of them tell me that they have not been told about the advance payments system. I do not know what the experience of other hon. Members is, but advance payments do not seem to be programmed into the initial assessment. If a person does not know about the advance payment system, they have an even bigger problem, because they cannot claim an advance payment if they are a number of days past their initial assessment. If people accessing unemployment benefits for the first time face a confusing system that does not give them the funding they are entitled to, given that they have paid into the system, and that prevents them from getting back into the workplace, that is not an improvement on the current system. There has been a lot of party political advertising of the employment rate, the Government’s successes, childcare and all that, but we need to look at these genuine, serious problems.

Despite the objective of simplifying the system, the roll-out would have been disastrous in my area if it were not for our welfare rights advisers. To my mind, the staff of Tameside citizens advice bureau are absolute heroes. The reality is that that kind of support is being stripped from all communities. Law centres and citizens advice bureaux are closing. If the system is to work, we have got to give people impartial, fair advice. The hon. Member for Ribble Valley (Mr Evans) made a fair comment about how people can get in touch with welfare advisers. That is important, and it is sad to see welfare advisers going at a time when people need them.

Universal credit is a big change, and if people do not have support to access it properly, their perception of it will be negative. We have to ensure that that is not the case. From my casework and experience, from what is happening in other parts of the country and from people’s testimonies, my overwhelming impression is that, despite the scale of the bureaucratic challenge of moving to universal credit, we are not tackling the big problems of our social security system. We are not providing sufficient support for people who have lost their job for the very first time—particularly during the global finance crisis—and who never thought they would be unemployed. When they find out what their national insurance contributions will buy, they are often frankly disgusted at the level of support available to them.

We are not tackling the sanctions, the conditionality and the job search criteria. Frankly, I think we are treating a lot of people like children and robbing them of their dignity. We are not giving them what they should reasonably expect when they access the welfare system. Most of all, the system is unable to cope with the flexible working patterns that are so common in our economy. Many people do not have jobs for life; often, they do not even have jobs that last for years. The system has to reflect that, but I do not think those things have been priced in. Despite the bureaucracy and our overall level of spending on the social security system, people in my constituency have been left genuinely destitute and reliant on charity and food banks to survive. That cannot be right. Given the resources we put into the system, there has to be a better way to do it.

I think we need an even more radical approach. We should look to other countries for best practice. Concepts such as basic income do not lead to a taper problem and do not disincentivise people from going back into the workplace; rather, people are supported in different stages of their lives and everybody gets something out of the system for what they pay into it. That is the direction in which we have got to be looking. We need something more radical than universal credit. Universal credit, if it worked properly, would be welcome, but at the moment there are huge teething and design problems. Even once those problems are sorted, it will not tackle the big problems of the welfare system. Let us sort those problems out, but let us not end the conversation about welfare reform here. Let us address the challenges and create a system that truly works for everybody.

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[Nick Thomas-Symonds (Torfaen) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Nuttall. I warmly compliment my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) both on securing the debate and on the dignified, cogent and passionate way in which she put her case this morning.

The hon. Member for Weaver Vale (Graham Evans) spoke well about the staff to whom he had spoken at a Jobcentre Plus office in his constituency. My hon. Friend the Member for Makerfield (Yvonne Fovargue) made an excellent speech, drawing on her experience at Citizens Advice in the 1980s and speaking powerfully about the sad explosion in the number of food banks in this country since 2010.

I am grateful to my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) for his speech, in which he spoke well about the complexity of the modern economy. He made a powerful point about our need to draw on experience, and any well thought out, coherent and simple policy is to be welcomed. I may even give him a shorter book to read in due course. There were also interventions from my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) and the hon. Members for Congleton (Fiona Bruce), for Cheadle (Mary Robinson), for Bolton West (Chris Green), for Strangford (Jim Shannon) and for Ribble Valley (Mr Evans).

Much of today’s discussion has been about the language with which the debate is conducted, and I am extremely concerned about the language framework that the Government use. The Chancellor of the Exchequer said on the “Today” programme on Monday 8 October 2012:

“It is unfair that people listening to this programme going out to work see the neighbour next door with the blinds down because they are on benefits.”

Those are his actual words. He presumably thinks that that type of stuff is popular at the Tory conference. The real problem with that sort of language is how divisive it is. There is no sense that the person behind those blinds might be vulnerable or disabled. The Minister has an opportunity today to condemn such divisive language, and I sincerely hope that she feels able to do so.

Even if one accepts the abysmal logic, which I do not, the real problem is that the Chancellor is so lost in tactical mazes of his own construction that he is actually on the wrong side of his own dividing lines. He is attempting to separate people into the workers and the non-workers—that is precisely what he was trying to do in that quote. However, what we saw with the cuts to tax credits, which the Chancellor eventually caved in on, we are also seeing with the cuts to the universal credit work allowance from this April.

[Mr Nigel Evans]

What was appalling under the previous Labour Government was the high level of unemployment, which meant more people spending time with the blinds down. Under this Government, employment has reached record levels, unemployment has dropped, and far more people are earning more money than ever before. Is that not bringing dignity to the British people?

[Nick Thomas-Symonds]

I will come to people earning more than ever before in a moment. I make no apology for a Government who introduced the national minimum wage or for wage growth in the Labour years. This decade risks becoming the lost Tory decade, with wage growth lower than at any point since the 1920s.

The hon. Gentleman wants to talk about money in people’s pockets. I have already spoken about the effects of the cuts to the universal credit work allowance on single parents from this April, so shall I use some other specific examples? Take a couple, living and working together, one or both of whom has limited capacity to work as they are disabled. For them, the work allowance will be cut from £7,700 to £4,700, a loss in income of £3,000. That is for people who are actually in work. To take another example, single individuals will essentially lose everything, with a reduction of £1,332, at a net loss to income of £865.

When universal credit is damaging and attacking people in work, it is in danger of undermining the aims that it was set up to achieve. If Government Members do not want to take my word for that, let us take the word of the Social Mobility and Child Poverty Commission’s “State of the nation 2015” policy paper, published on a big date for dumping things just before Christmas, 17 December 2015. The paper is available on the Government website if any Members want to see it. The commission stated:

“The immediate priority must be taking action to ensure that the introduction of Universal Credit does not make families with children who ‘do the right thing’ (in terms of working as much as society expects them to) worse off than they would be under the current system. That means reversing the cuts to Universal Credit work allowances enacted through the Universal Credit (Work Allowance) Amendment Regulations 2015 before they are implemented in April 2016.”

That is what the commission says should be the priority from this April.

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[Priti Patel]

We are clear that people being moved on to universal credit from tax credits will be supported and will not lose out. A fundamental principle of universal credit is that it removes barriers that may have existed and, importantly, it gives people the support they need when they come on to it. That is different from previous systems. It is different from tax credits, for example, which did not provide support for people when they wanted to increase their hours and earnings.

The previous system was fragmented and there was little incentive for people to take up even a few more hours of employment, but under universal credit people can benefit as soon as they start to work. It is a simpler system to understand. It comes back to the point that we have support in our jobcentres to help people to extend their hours of work or, when they are moved on to universal credit, to understand the system and support them.

That is different from what existed before. Under universal credit, no one will have to worry about the Government asking for money back because the real-time information system connects the employer and Her Majesty’s Revenue and Customs on the number of hours worked. That is dramatically different from the situation when tax credits was introduced and millions of low-income families faced uncertainty about owing money back to HMRC at the end of the year. I am sure all Members have dealt with many examples of casework in that area.

I want to come on to the points raised, because I am conscious of time. There is evidence that universal credit is getting people into work and helping them stay in work. We have reviewed universal credit and, as a result of the support that people are given, we see that they spend 50% more time looking for work. We now see more universal credit claimants moving into employment compared with JSA claimants thanks to the focused support they get through their single point of contact, their work coach and other means.

[Mr Nigel Evans]

Is not the point—surely this helped win us the general election—the message that no one should be better off out of work than in work? With the national living wage and higher thresholds, we have ensured that far more people who are in work will keep more of their money.

[Priti Patel]

My hon. Friend is absolutely right about people keeping more of the money that they earn rather than going through the process of having more taken away and then recycled through benefits such as tax credits. It is also worth reflecting on the point made by my hon. Friend the Member for Weaver Vale. He mentioned Northwich jobcentre, which has done a great deal of work to support people on universal credit. The award that the Secretary of State gave to staff members there shows how they are supporting people and transforming lives, which is fundamental to the welfare reforms that we are bringing in.

Many comments were made about universal credit in terms of the process, the roll-out and delays. I do not agree with some of the assessments and analysis given, and those with reference to the OBR in particular. We are rolling out universal credit as planned. Importantly, we no longer believe in the “big bang” model used in previous systems such as tax credits, which when introduced brought a great deal of chaos to jobcentres and the welfare system. We have adopted a test-and-learn approach to ensure safe and secure delivery and, importantly, to ensure that we can learn from individuals as they go through the process.

We have an enhanced digital service, which makes it clear immediately that a claim has not been progressed and that further information is needed. Jobcentre Plus and work coaches speak well of the system. I have seen it in action, with the immediate way in which data are exchanged and claims are processed. We have faster electronic payments to allow the Department to make payments via BACS on the same day to minimise further delays, because of course people need to be supported.

I do not agree with the comments made about the report from Citizens Advice, because we know that the research for that was based on anecdotal evidence from a small group of current UC claimants—the sample was less than 1%. Even Citizens Advice said that that was not representative of all claimants on universal credit.

We have universal support working alongside universal credit, which offers wraparound support for those who need it. That comes back to the points raised about no two individuals being the same. Situations are different for claimers and no one can count for the life circumstances of individuals, so universal support provides that wraparound support.