Universal Credit

Debate between Nigel Mills and Anne Marie Morris

Wednesday 6th March 2013 Commons Chamber

[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.

--- Later in debate ---

[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.