Universal Credit (Application, Advice and Assistance)

Philippa Whitford Excerpts

1st reading: House of Commons
Monday 27th November 2017 Commons Chamber

[Dr Philippa Whitford (Central Ayrshire) (SNP)]

I beg to move,

That leave be given to bring in a Bill to reform the Universal Credit application process; to make provision about advice and assistance for claimants, and arrangements for payments; and for connected purposes.

I welcome the Chancellor’s removal of the arbitrary seven waiting days, which reduces the waiting time to five weeks, but the Department for Work and Pensions’ own data shows that a quarter of all claimants are currently waiting longer than six weeks. If universal credit is paid monthly because it is meant to be like a salary, surely the maximum waiting time should be a month. If the DWP cannot deliver that, the roll-out of universal credit should be paused. It must be recognised that 58% of universal credit claimants are paid fortnightly or weekly and therefore do not have a monthly salary to see them through the waiting time. Many work on zero-hours or low-hours contracts and are unlikely to have any savings to fall back on. The impact has been demonstrated by the Trussell Trust’s report of a 30% surge in the use of food banks in universal credit roll-out areas.

Universal credit arrived in my constituency on Budget day—last Wednesday. That means that many of my constituents will be facing weeks five and six at Christmas and new year. It means that they will go into the festive season and the hardest part of the winter without having received their universal credit. I welcome the increase in the advance loans to 100% of entitlement, but I have to ask why, if that can be worked out so quickly, it takes so long to deliver universal credit. I also welcome the fact that the payback has been stretched to a year, but it is important that claimants do not have to jump through hoops and that that is the routine time, so that paying back advanced loans does not generate further financial stress.

The Bill proposes that the Government follow the options that will be available from the Scottish Government in the form of twice-monthly and direct landlord payments. Claimants should not have to jump through hoops for those; they should simply be able to choose their option, because they best understand their own circumstances.

The Bill is an attempt to solve some of the administrative problems, particularly the fact that the circumstances in which a claimant lives are taken into account only on the one assessment day every month, with changes applied to the entire month regardless of how short a time they actually apply. If a child left home the day before assessment day, it would therefore be assumed that they had not been there for the whole month, meaning that the benefits would be reduced. Claimants complete their logbooks online. Computers have calculators, so how hard is it to work out to what proportion of the month changes of circumstances apply?

Similarly, self-employed people face a minimum income floor of more than £1,100. If they earn more, their universal credit is reduced, but if they earn less, it is not increased. Such an approach does not take account of the variability of many self-employed professions, the drop in people’s income if they choose to have a short holiday with their family in the summer, or the effect of the four extra public holidays at Christmas and new year.

There is a need to find a replacement for the award letter to give a detailed breakdown of universal credit components. Some banks have been advised by their risk departments not to lend against universal credit at all. Many working people will now be receiving tax credits through universal credit, but that income may not be counted towards getting a mortgage. Those who are looking for loans may also be refused, and that could drive them into the arms of payday lenders and loan sharks. Trying to tackle this matter could also help to re-establish automatic passporting to other benefits, particularly free school meals. North Ayrshire Council in my constituency automatically registers children for free school meals both to reduce stigma and to ensure that children do not miss out. It is important that we do not lose that advantage.

The Bill calls on the Government to make separate payments the norm. It is often said that universal credit should be like a salary, but salaries are paid to individuals, and it is quite Victorian to go back to the idea of the breadwinner. I certainly would not be too chuffed if my salary were posted to my husband. To be serious, however, financial control is usually the first level of abuse. A survey of 4,000 people showed that one in five had faced financial control or abuse. Although those people are not all women, 88% were women in relationships, which means that they are the vast majority. A women with no money in her purse at all very quickly becomes isolated from her friends or from any support network because she simply cannot afford to go for a coffee. She feels embarrassed, she starts to withdraw and she ends up isolated. More than half of all women in abusive or violent relationships cite lack of money as their reason for not leaving. No woman should have to choose between poverty and abuse.

The Bill calls for both a cumulative and an equality impact assessment of all the welfare changes over the past five years to be carried out and then published. The biggest loss of income is due to the benefit freeze, the two-child limit and the bedroom tax, but the issues involved in universal credit are compounding the problem. This Bill seeks to find pragmatic solutions. It must not be forgotten that poverty is the biggest driver of physical and mental ill health. It has the greatest impact on children because they find it hard to study when they are cold and hungry. Poverty can blight their lives, ruin their educational chances and reduce their chances of a good job in the future. Instead of ending up spending money on blighted lives in the criminal justice system, dealing with drug addiction or paying benefits to those children, we should invest in them now. There was broad agreement on the policy of universal credit, but we need to fix the reality so that universal credit becomes a flexible and supportive benefit that helps people back to work, but does not punish them for the situation they find themselves in.

I call on the Minister to listen to charities, local authorities and MPs right across this House. It is important that the Government recognise that universal credit is flawed and they need to fix it now.

Question put and agreed to.

Ordered,

That Dr Philippa Whitford, Neil Gray, Drew Hendry, Kirsty Blackman, Chris Stephens, Alison Thewlis, Frank Field, Norman Lamb, Sarah Champion, Liz Saville Roberts, Paula Sherriff and Lady Hermon present the Bill.

Dr Philippa Whitford accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 16 March 2018, and to be printed (Bill 132).