Universal Credit

Nigel Mills Excerpts

Wednesday 6th March 2013 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to follow the Chair of the Work and Pensions Committee and to speak about the report. This is the first report that I had the pleasure of working on when I joined the Committee. I feel slightly guilty in that I missed all the evidence sessions because I did not join the Committee until it started to write the report. I therefore missed the hard work and did the fun bit at the end.

I should probably start where the Chair of the Select Committee finished—the complex IT system. Those of us who have followed the news of new, large IT systems from the outside over many years would be brave or foolish to be entirely optimistic that a new, super IT system will work flawlessly from day one. Perhaps the Minister will assure us that that will be the case, that the IT has worked in the various tests and trials, and that it will work when we switch over to having live feeds of millions of entries from HMRC.

[Richard Drax (South Dorset) (Con)]

I, too, am concerned about putting all our eggs in one IT basket. Would it not be sensible to retain the staff in local authorities—in my constituency, they are about to be laid off—so that there is a back-up, at least until it is proved that the system works?

--- Later in debate ---

[Nigel Mills]

I see the sense in that, but it would involve a large cost.

Speaking as someone who still does the weekly payroll for a small charity with six employees, I am looking forward to the time when I have to input the data into the HMRC system weekly or monthly, rather than making the PAYE payment that is due once a quarter. I think that the system will work quite successfully for large employers that are used to operating PAYE systems, where they can hit a “submit” button every month and the data transfers over on the right date. However, for a lot of small employers, this will be a big change in their procedures from having to give the payroll data to the Revenue once a year. That will be a test.

Perhaps the Minister will update us on how confident he is that the systems will be able to interact and that the millions of entries will make their way to the right place at the right time, so that all the people who will be relying on it for their universal credit payments will receive the right amount on the right day, especially as the system rolls out and more people keep being added.

It is worth saying, as the Committee noted in its report, that there is broad agreement with the principle of a single payment that makes it easy for people to move in and out of work, with their income going up or down so that they get the right benefit at the right time. We all want that to work. Clearly, if it does not work, it will leave people in a whole new mess.

That is not to say that people are not in a mess now. We all have constituents who have struggled with the existing system of multiple claims. There are people whose tax credits have gone wrong, perhaps because their income has changed during the year and they have forgotten to notify HMRC or HMRC has lost the notification, who have ended up with a large bill at the end of the year that they were not expecting and did not have the money left for. We are not trying to reform an ideal system or even a good or acceptable system; we are trying to move from the existing pretty poor and complex system to a system that is easier to understand and easier to deal with. However, there are clearly issues with any new IT system.

The report was right to recognise that the new system, which we all broadly welcome, will work for the majority of claimants who are IT literate, understand the system and can update their circumstances and check what is going on. It also considered those for whom that is not the case and who will struggle with the new system—perhaps because they are not IT literate or, for whatever reason, have not got a bank account—and struggle to manage their own affairs. However, such people will probably already be struggling with the existing system in which they have to make multiple claims and try to manage the situation. We are not talking about people who are fine with the existing system but will suddenly have problems with the new one; they will already be experiencing some of those problems.

I will not do a wide sweep of all the issues mentioned by the Chair of the Work and Pensions Committee because that would be pointless repetition, but I will pick up some of the main themes. I support a system that, by default, is accessed electronically rather than on paper—that has to be the right way forward. At some point, the system must be accessed via IT by default and not choice, and now is probably the right time for such a transition. Statistics state that 78% of working-age people who claim benefits already use the internet, and about half of those use it every day. There is not a huge number of people with no IT access at all, although the 22% who are not regular users of the internet will need some support.

[Anne Marie Morris (Newton Abbot) (Con)]

I am also a Member of the Work and Pensions Committee. As my hon. Friend will recall, we discussed the development of specific apps that will make it even easier for those who are IT literate and can deal with a claim on their phone.

[Nigel Mills]

Yes, that is recommended in the report and I think the Government promised that by 2014 there will be a separate app for universal credit. Currently, 92% of jobs advertised require some level of IT skills, so encouraging people to become more confident and use computers to claim their benefits is a move in the right direction. I agree that we must give the right support to those who cannot do that or have not done it previously, and I hope the Minister will explain to the House how that will be done.

The Government’s response to the report mentions computer terminals in jobcentres. I am not sure whether I have yet seen that on the ground and how we will get enough computers in jobcentres for people who need to claim, or how people will deal with the regular monitoring of their benefits. Universal credit is not a once-only application in which a person can sit with someone who does the form for them and that is it. The entire system relies on updating that will require regular IT access, not just a one-off.

[Kate Green]

The hon. Gentleman may not know the answer, but does he have any idea how long it will take to make a claim on average, particularly with regard to the point made by the hon. Member for Newton Abbot (Anne Marie Morris) about filling in the form on the phone? If it will take more than half a minute or so, it is unlikely that people will be able to cope with that on the phone, and they may struggle to do it online at all.

[Nigel Mills]

It would be very optimistic to assume that the application form will take half a minute. I have not seen the form, but I have not seen any Government form that takes half a minute for a long time—[Interruption.] Does the Minister wish to answer the question?

[The Minister of State, Department for Work and Pensions (Mr Mark Hoban)]

I think we must be careful and not underestimate where people are at the moment. The vast majority of claims for jobseeker’s allowance are made over the telephone and an increasing proportion are made online. We are not entering uncharted territory and I am surprised that Opposition Members seem keen to keep us in a luddite past. We need to tackle the digital divide, and this is a very good way of doing it.

[Nigel Mills]

I am grateful to the Minister although I am not sure we got an idea of how long the application form will take to fill in. Perhaps we will get that later.

[Hywel Williams]

Speaking as a non-luddite, I want everyone to be able to partake of the system. I am not a member of the Work and Pensions Committee but perhaps I can ask the hon. Gentleman—or even tempt the Minister—to say whether any attention was given to applications in Welsh in Wales, where Welsh is to be treated on the basis of equality with English? Perhaps the Minister will leap to his feet and reassure me on that.

[Nigel Mills]

Despite what some people think, Amber Valley is not in Wales so I am afraid that the use of the Welsh language is not an issue I have to worry myself or my constituents with. I will leave that point for the Minister.

The next area of concern is the single monthly payment per household, and making that replicate what most people in work receive as a salary is a sensible step. We are not talking about people who only receive benefits; people in work will receive universal credit on top of that, and we are trying to encourage them to work more hours and get more money, at which point their benefit will drop. In an ideal world, a single monthly payment that matches timing with salary must be a step forward. We are trying to help people get back into work and not face extra barriers created by the benefit system. Clearly there are issues, however, and some people will not be able to cope with one single monthly payment. We must consider how we will help them through that, deal with the exemption system, and find out that they are not coping before they get into so much debt that they cannot get out of it. It will be interesting to see the progress on new bank accounts, especially the jam jar system, although we have not yet heard how many providers are willing to offer such a system.

[Jane Ellison]

I am glad that my hon. Friend mentioned jam jar accounts because they are important. We have spoken previously about this issue, but it is one on which we are all urging the Minister to give the banks a really good kick. As I said in a previous speech, such accounts are one demonstrable way that the banks could make amends for what the public perceive to be a pretty poor show over the past few years.

[Nigel Mills]

I am grateful to my hon. Friend. We need to know soon how many providers are interested in that system and what the Government’s proposals are. People will be rolling into universal credit soon, and we must understand what their bank accounts will look like to ensure the system works. I have heard lobbying groups present interesting ideas about the real advantages of the jam jar system. People can choose to have their rent payment moved into a separate account so that it goes out on the right day and they cannot accidentally spend it on something else. Applications that use payment cards or jam jar bank accounts can produce useful solutions. Perhaps we can introduce a system under which people have the chance to choose their preferences. People must choose to set money aside for certain bills, rather than be forced in some draconian state-controlled manner and told how to spend their money, but an update on the issue would be useful.

I also want to consider the impact of this system on people who are self-employed. It is clearly right that they state each month what profit they have made so that any benefit they are due can be worked out. It is equally right that we encourage them to work hard and make a minimum level of profit and not somehow get round the system that applies to people looking for paid employment. I am a little concerned that we will end up with two different reporting and accounting systems. For universal credit people will have to report their monthly profit or income based on some kind of calculation, yet for tax purposes they will have to use a completely different calculation. That could leave them with two different sets of books and calculations which could be hugely complicated and they may end up with some true-up at the end. Hopefully, people can get some assurance that what is expected for universal credit is the same as HMRC expects at the end of the year. It could be nice and simple—people could hit a “total” button on the universal credit system and it will say what their annual profits have been.

[Anne Marie Morris]

Despite that complexity, presumably my hon. Friend would welcome the change to allow businesses that have become insolvent not to be written off, so that effectively over a five-year period they can come back without all the penalties that exist in the current system.

[Nigel Mills]

Yes, we want to encourage people to have another go if they wish—that makes perfect sense.

In conclusion, this system has been generally welcomed and we hope it is a real step forward. We are concerned, however, that for some more vulnerable people in society some of the changes will prove too much. We must ensure that we do not leave a whole load of people behind in a difficult situation, and that when the system goes live, the Government have plans in place to ensure that a worse situation does not develop.