Welfare Reform and Work Act

Rachel Maclean Excerpts

Wednesday 21st March 2018 Westminster Hall

[Dr Whitford]

I am, and I thank my hon. Friend for that intervention. The problem with all the changes, going right back to 2010, is that there never was a proper cumulative impact assessment to look at what changes on top of changes have done and what happens to people who are in more than one group. We know that lone parents are impacted by changes, but what if a lone parent is also disabled?

[Rachel Maclean (Redditch) (Con)]

Does the hon. Lady agree that all the changes in the welfare legislation should be seen in the broader context of other policies, such as the rise in the national living wage, which is lifting some of the lowest paid people in this country out of poverty?

[Dr Whitford]

I will come to that point later in my speech, if the hon. Lady is happy to wait.

In addition, carers are now subject to conditionality and treated as jobseekers, regardless of what their caring commitments are. That means that they may be open to sanctions. In 2013 we had the infamous bedroom tax, which thankfully in Scotland we have been mitigating, but which has impacted on people with disability, who will lose 14% of their housing benefit if they are deemed to have a spare room. Many disabled people require additional space, whether that is for complex equipment or because they need to sleep separately from their partner, or because they routinely or occasionally require someone to stay over when they are not well.

With the Welfare Reform and Work Act we also saw the removal of the work-related activity group component from employment and support allowance. We spoke out against that repeatedly. Taking £30 a week away from someone who has been defined by DWP assessors as not fit to work will most certainly not get them back into work. That impacts particularly on people recovering from major illness. As a cancer surgeon, I have seen for myself the impact on people who have gone through a year of intense surgery, radiotherapy and chemotherapy and the time it takes to get back to work. We are talking about extra heating, because they are at home. In England, we are talking about prescription charges and car parking charges at hospitals, both of which, thankfully, patients in Scotland do not have to pay. Is it any wonder that this Government have been criticised by the United Nations for breaking the convention on the rights of persons with disabilities? It has been a relentless attack.

The stress has increased the mental health issues suffered by people with disability. A survey has shown that over 40% have at some time considered suicide. What kind of society are we, if we are not willing to look after those who are vulnerable? We can judge a society by how it looks after its most vulnerable. As these disability benefits come to Scotland, it is our aim to use a human rights approach and ensure that dignity is at the centre of how we treat people.

Carers should also be supported and valued. They save the state millions of pounds by providing virtually free care. In Scotland, one of the first Acts that will come in next year will increase the carer’s allowance to at least the level of jobseeker’s allowance. It is little enough, but it is at least a declaration of intent. It is envisaged that employment support allowance is to support those who, due to their disability, are simply unable to work. PIP is meant to allow those with disability to reach their full potential. We should not be sticking people in their houses, because we take away their mobility, and then saying, “We are trying to get them into work.” People with disability who are working have extra costs, and that is the whole point of PIP, so the Government should put their money where their mouth is.

We also know that child poverty is rising and is expected to rise further. We have seen it climb by about 5%. The poorest areas in the UK now have child poverty rates of around 50%. How can that be right, when we know the impact that will have on children? But while we talk often about child poverty, we should recognise that it is actually family poverty, and that children cannot be separated from the experience of their family. Their income has been hollowed out since 2010. We saw the benefit cap in 2013 set for families at £26,000 a year. That affected about 20,000 families. The Welfare Reform and Work Act 2016 cut that to £23,000 in London and to £20,000 elsewhere in the UK. That affected 88,000 families, who lost either £3,000 or £6,000 from their income.

In 2011 we saw the local housing allowance brought in to cut what was paid for those living in the private sector. It reduced housing allowance from the median in their area to 30%. But in 2016 that was frozen and in a third of areas it does not even come close to 30%. In London, housing benefit for those in the private rental sector will cover only 16% of their housing costs, meaning that they fall about £1,000 a month short. That is significant for anybody’s wallet, but for those at the lower end of income earnings it is a severe hit. That has led to over 4.5 million people in the private rented sector struggling as rents have soared.

In 2016 the Government cut the family premium that was allowed with a new claim or a new birth, leading to a loss of £907. The bedroom tax also affects families, particularly in situations of separation or divorce, because the parent with minor caring responsibilities is not recognised. For example, a man—most likely—now living on his own in a small flat is not allowed a bedroom that would enable his children to stay over when he has them for the weekend. What does it say about us that we are not trying to strengthen families, but actually trying to undermine them?

Tax credits, which had such a big impact on child poverty, have faced attrition since 2011, when the first thing to go was the baby element, removing over £500. The 2012 changes saw families over £700 worse off. We all remember the haggling in the Chamber about changes to tax credits and the Chancellor stepped back from doing it after the Lords objected, but that was because he knew that those tax credit changes were simply hidden within universal credit and that, therefore, eventually they would hit everyone. The Government have removed the family element for the first child, again over £500, and now tax credits are claimable for only the first two children. The third child in a family loses out £2,780 a year. That has a huge impact on such families.

Universal credit has also reduced the work allowance. That means that it will often not be worth the while of the partner in a family—the second earner—going out to work, because they would lose so much and, particularly when childcare is taken into account, could end up worse off than if they did not take the extra work. The Government always talk about making work pay, but they do not always follow through.

The policy from the 2016 Act that has had the biggest and widest net, dragging more people into poverty, is the benefit freeze. Again, that comes on top of a 1% cap that was in place from 2013. The holding down of all working-age benefits has been in place for a number of years.

--- Later in debate ---

[Dr Whitford]

Yes. That is exactly what I will move on to. Obviously, the former Chancellor, George Osborne, justified the benefit freeze because at the time inflation was 0.3%, but inflation now, due to Brexit and the fall in the value of the pound, is officially 3%, as measured last September. By 2020, low-income families will be over £830 worse off, just due to the benefit freeze. If we look at the cumulative cuts, an average family will be £1,300 worse off. But if we drill down into families that have three or more children, that builds up and becomes eye-watering.

[Rachel Maclean]

The hon. Lady is being extremely generous in giving way. I want to ask about the principle behind what she is saying. I was not an MP when the benefit freeze was introduced, but I believe the logic was that at that point benefit spending was rising much faster than average earning. Does she think it is right that spending on benefits should go up faster than the average earnings of people in the country? Does she think that should be the case, and is she advocating for that to continue now?

[Dr Whitford]

I am advocating that inflation is now ten times what it was when the policy was brought in, and that therefore this policy should be re-thought. It was never imagined to have such a punitive impact. As my hon. Friend the Member for Airdrie and Shotts (Neil Gray) said, the return to the Treasury has been much greater than planned, so the Government could easily afford to unfreeze benefits. That measure is having a particular impact on the poorest.

Like the point raised by the hon. Member for Redditch (Rachel Maclean), the Government and the Conservative party claim all the time that they are helping the poorest through other actions. The number one thing that is always quoted is the national living wage: not the real living wage, which is 95p an hour higher, but the pretendy living wage. The Office for Budget Responsibility, however, points out that this does not offset the benefit cuts. The increased earnings owing to the national living wage will be £4 billion a year by 2020. The benefit cuts are three times that: they will be between £12 billion and £13 billion a year. I am sorry, but the Government and the Conservative party cannot hide behind that claim. They are still taking £8 billion from the poorest families.

The other thing that is always quoted is the raising of the personal tax allowance. That obviously has a bigger impact if someone pays tax, but only £1 out of £6 spent by the Treasury on raising the personal tax allowance will end up being for people in the lower half of the income distribution curve. Unfreezing benefits would be much more targeted—even excluding child benefit from that and focusing on all the other benefits would have the biggest impact on helping poor families.

Other benefit cuts have specifically impacted on children and families with children. The health in pregnancy and Sure Start maternity grants were both cut, even though we know the importance of the first 1,001 days after conception. That is about the health and nutrition of the mother and the early years of the child. We know that the impact of poverty affects children life-long; it reduces their educational attainment and tends to limit their job prospects. They are much more likely to end up on benefits in the future. It also affects their health. They have higher rates of physical and mental health issues than those in affluent families. They are at greater risk of addiction, of ending up in the criminal justice system, of committing suicide and of being in a road traffic accident or a house fire.

All that costs money. Mitigating in later life the issues that come from child poverty is estimated to cost the Treasury almost £6.5 billion a year. If there is no change in direction from the Government, we expect 200,000 more children to be growing up in poverty by 2020. I suggest to the Minister and the Government that they do not spend £6.5 billion mitigating suffering in later life, but invest in early years now.

[Rachel Maclean (Redditch) (Con)]

It is a pleasure to serve under your chairmanship, Mr Gapes.

I congratulate the hon. Member for Central Ayrshire (Dr Whitford) on securing this important debate. It is a pleasure to follow her speech, which raised some very important issues. As Members of Parliament, we all want to ensure that the welfare system operates correctly. I am a strong believer in what the Government are doing on welfare and find myself, once again, in a debate about welfare reform. I am glad to be here, because one of the Government’s most important jobs is looking after those who are unable to look after themselves. I am proud of what this Government have done during the time I have been in Parliament, and of the record since the 2010 coalition Government and the Conservative Government that followed.

[David Linden (Glasgow East) (SNP)]

The hon. Lady talks about how proud she is of this Government’s actions, but by the time this debate concludes, at 11 o’ clock, St Stephen’s church café in Redditch will open as a food bank. Does she not understand that there is a clear correlation between this Government’s actions on welfare reform and the food banks in her constituency?

[Rachel Maclean]

I visited the food bank and have spoken to the people there, but time does not permit me to talk in depth about those issues. I have an ongoing dialogue with both the people who run the food bank and the people who use it. I understand very well what is happening in my constituency of Redditch and, if the hon. Gentleman will forgive me for moving on, I will speak about some of my experiences with universal credit and the jobcentre there.

I will focus my remarks on universal credit because it is a key plank of the Government’s reforms. Since my election, I have made it a priority to understand what services exist for my constituents who face challenges, whether those are unemployment, poverty or physical and mental health problems. As a constituency MP, I understand very well what is going on. There are areas of deprivation in Redditch, as there are in every constituency up and down the country. It is up to the Government to ensure that the help is on the ground, where it is needed.

It is important to revisit the principles behind the drive to reform the system that we inherited from the last Labour Government. In that system, people had little or no incentive to get back into work. When they did, they found themselves worse off and liable to lose money if they took on more hours or a better paid job. How could that be right?

The hon. Member for Central Ayrshire talked about tax credits. It is my understanding from DWP statistics that tax credit spending ballooned from £1.1 billion at its introduction to £30 billion a year by 2015. I do not think it is right to spend such a rapidly escalating amount of GDP on benefits. That indicates there is something fundamentally wrong at the heart of the system.

There is widespread public support for the principle that welfare should be not a life sentence, but a lifeline as someone transitions through difficult circumstances or the loss of a job. The old welfare system had become labyrinthine in its complexity, with a number of different benefits adding to the confusion over what someone was entitled to. It was not a system that gave people a ladder to a better life, but rather one that trapped them in worklessness and poverty.

[Dr Whitford]

Does the hon. Lady recognise that more than 60% of people who require support are working, but are stuck in low-income jobs? Surveys show that very few of them are out of working poverty 10 years later.

[Rachel Maclean]

I do not agree with that, because the evidence does not bear it out. Universal credit is an agile system that is designed not only to get people who are out of work into work, but to support them as they look for better-paying jobs. I will come to that in my speech.

I accept that reforming welfare is difficult, as the hon. Lady said. There can be no MP in this House who has not come across heart-breaking cases where the system has failed. Those are wrong, and we all stand up for our constituents, but they are not evidence of a failing system—rather, they are the inevitable consequences of a large and challenging public sector reform process. Since I have been in this House, I have seen Ministers listen to problems and make changes to fix the system. Recently, we have seen adjustments reflecting concerns raised on both sides of the House, which are welcome. We hear much criticism from the Opposition, both the SNP and the Labour party, on this. It is extremely easy to criticise from the Opposition Benches, but no real constructive alternative is offered.

I have made it my priority to visit the jobcentre and speak to local people on the ground in Redditch. These are just a few of the experiences that I have heard. My local jobcentre manager has worked there for 30 years. She described the system as “working very well” for her clients. She said that it is “the best system” she has seen in her 30 years as a jobcentre manager and that it helps people “who really need help”.

The first example is a customer who was seen by a work coach when universal credit first went live. The customer had a very difficult personal background. She was totally disengaged when she saw the work coach and she was quite difficult to work with. The work coach encouraged the customer to gain upskilling in maths and English. With the work coach’s help, she found work. The customer is now working in a role where she wants to help others to find work. She even shares knowledge of vacancies with her former work coach to encourage other people to find work.

Another example is a customer who had been on and off benefits since 2012 and was working with a work coach. This customer struggles to make eye contact and lacks confidence. Over time, the work coach established a rapport and helped him to gain confidence. They referred him to work experience with a local retail outlet. When he attended, the work coach asked if there had been any changes. The customer looked them in the eye and said, with a smile on his face, “Would that include the fact that I’ve got a job?” The coach said that they are “delighted” and “so glad” that they referred him to the retailer in the first place, and:

“Seeing the customer smiling about his success really made my day.”

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Will the hon. Lady give way?

[Rachel Maclean]

This must be the last intervention. I am aware that others wish to speak.

[Drew Hendry]

In that case, I am grateful to the hon. Lady for allowing me to intervene. She is recalling the experiences of DWP managers in her case studies, but how many claimants has she spoken to directly to get their stories?

[Rachel Maclean]

I have spoken to claimants in local organisations on the ground.

[Drew Hendry]

How many?

[Rachel Maclean]

Many. I can write to the hon. Gentleman with the precise numbers, if he would like me to.

I will touch on another example. A qualified hairdresser had been a carer and was a single parent to her disabled children. She found it difficult to find work to fit around her responsibilities. Her work coach suggested that she consider self-employment and she was referred to the new enterprise allowance in February 2016. She commenced self-employment, hairdressing in care homes, from April 2016.

By April 2017, she had expanded her business by 200% and was nominated for entrepreneur of the year by learndirect. At the ceremony on 4 July, she won the award. She was delighted and said it was all down to the initial push and referral from her work coach, followed by support.

After the meeting, she sent an email to the work coach, which said:

“Thank you for meeting with me yesterday, I felt very positive after our appointment. This is the first time I have ever been out of work and in this situation so was dreading the whole ‘Job Centre’ scenario. I don’t know what people complain about, so far everyone I have encountered has been really helpful and proactive.”

Is it not time that we had more such stories in the media, instead of the negativity we are always hearing from this place?

At the heart of the system are the work coaches, who offer tailored, individualised support to help people. Last week, I was privileged to open Redditch Nightstop, a centre for young people living in family-supported housing, where I did indeed meet claimants of the system, which the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) asked about.

I talked in depth with the local jobcentre manager. Her feedback was that she was able to join up the local courses offered by Redditch Nightstop with some of her clients, who would otherwise struggle to cope with basic life skills. That type of system is a positive step forward that enables people on the ground, who know the local sources of support, to access them and to gain confidence. Universal credit works with those clients, not against them.

I am aware that other hon. Members wish to speak, so I will keep my remarks about older workers brief. I have often spoken in Parliament about the discrimination faced by older workers in our society. I am an older worker myself, but age should not be a barrier to entering a new career or occupation, retraining or upskilling, provided that it is a positive choice.

In addition, because skills shortages affect many businesses now that we have virtually full employment—thanks to the work of this Government—many businesses are realising that youth is not everything when it comes to employing staff. B&Q has long been a champion of that policy, and it has reaped many accolades in the process, but other household names are now championing it too.

The Government have introduced many measures, including the fuller working lives strategy, to provide real support for the objective of achieving human potential at any age. The strategy states that ageist stereotypes should be challenged and older people should be allowed to contribute, as many want to. I believe, as do the Government, that work is not just an economic proposition. It allows people to have a purpose in life, to improve their mental health and wellbeing, and to retain their independence and autonomy.

To support that with practical measures, the Department has expanded the older claimant champion network in all 34 Jobcentre Plus districts. The champions work collaboratively with more than 11,000 work coaches and employer-facing staff to raise the profile of older workers, highlight the benefits of employing older jobseekers and share best practice. Recent research indicates that older claimants found that support useful. Further analysis of the provision for older claimants is ongoing. When the Minister sums up, will he tell us when the Department will publish the impact assessment, which was promised for spring 2018?

Anne Willmot was recently appointed as Business in the Community’s “Age” campaign director. She speaks of the challenges that an older population faces. Ageism is rife; a 50-year-old is 4.2 times less likely to be invited to interview than a 28-year-old. We need to support those with health issues and caring responsibilities to prevent them from leaving their jobs, and to deal with the discrimination and bias in recruitment that have made it so hard for the over-50s to secure employment.

I welcome any update from the Minister about what more the Government can do on that issue. Taken together, those policies, and many others, will help to achieve the aims of a welfare system that works for everybody, at all stages of life.

--- Later in debate ---

[Alex Burghart]

As the hon. Gentleman will have heard from my opening remarks, there are two issues at play. The first was the broken economy. As I have said, if the Government had not taken action to dramatically reduce public spending—[Interruption.] Our deficit has been cut. The hon. Gentleman suggests from a sedentary position that that was in 2008 and the situation is different now. Our deficit has been much reduced by the actions of this Government and the coalition Government over the past eight years, but it has not yet been fully eliminated.

Once the deficit is fully eliminated, we will be able to do the most important thing, which is to start to reduce debt as a proportion of GDP. That is essential, because at the moment we are spending more on servicing our debt than on defence, on education or on our police forces. None of us wants that. Effectively, we have created a new “Department of Debt” that sits in Whitehall and gobbles up money. I want to see the budget for that Department cut year by year, but only the steps that this Government are taking will achieve that.

Let me return to my point about the broken welfare system. Regardless of what happened in 2008, it was essential that the welfare system be reformed to encourage more people to take more work and benefit from all the associate factors surrounding it. We all know that there is great dignity in work and that it provides pride, purpose and a great example to children. It is what we want for ourselves and for our constituents.

[Rachel Maclean]

My hon. Friend is making an excellent speech. Does he recognise that well over half a million fewer children are living in workless households now than in 2010? Children are five times more likely to be in a low-income household if they are in a workless household than if they are in a household in which all adults work. There is a knock-on effect for the next generation.

[Alex Burghart]

I am extremely grateful to my hon. Friend for stealing my thunder and taking away my next paragraph. Yes, I am fully aware of that fact and she is right to emphasise it. One of the great things that has happened since 2010, which must be acknowledged in a balanced debate on the subject, is that we have achieved record employment in this country. Unemployment has fallen substantially—in all constituencies, I believe—but it is unfortunate that so far my hon. Friend has been the only hon. Member to welcome that in this debate.

It is right to talk about the full package. Yes, there have been cuts and freezes to welfare payments but, as my hon. Friend mentioned, they must be seen alongside increases to the national living wage, increases to the tax threshold, a new offer on childcare and the creation of universal credit, which enables people to progress in work without the disincentives that existed before. Alongside all that, the most important thing that has happened is that far fewer people are in out-of-work benefits. When we talk about assessments that people may have lost money under the welfare changes, we must always acknowledge that this is a dynamic system. The whole point is that people move into work and progress in work so that they earn more money. I fear that that has not been acknowledged in this debate.

The Welfare Reform and Work Act introduced several changes, as hon. Members have already mentioned, but they must be seen in the context of fairness. The welfare cap limited the amount of money that some families receive, because it was deemed by Parliament that it was unfair for families out of work to receive more than families in work. It was not just a parliamentary majority of Conservatives and Liberal Democrats who agreed with that; regular polling has found that 77% of the population do, too.

I am delighted to draw attention to a new report by Policy in Practice, “Low Income Londoners and Welfare Reform”, which has examined the effect of the welfare cap on 600,000 low-income people in London. It shows that there has been a positive impact on employment outcomes for those families and no measurable impact on homelessness in comparison with a control group of similar households. The welfare cap is working in London, and the most serious piece of analysis so far conducted upholds that. It is a good example of how adjusting the welfare system carefully can create work incentives to help people to make positive choices to improve their lives and those of their families.

The hon. Member for Central Ayrshire mentioned the four-year benefit freeze. I acknowledge that inflation is now higher than it was when the freeze was set. I also acknowledge that it is now falling. As my hon. Friend the Member for Redditch (Rachel Maclean) pointed out, the value of benefits increased by 21% between 2008 and the 2016 Act, while the value of wages increased by only 11%. The freeze is therefore not quite as stark a corrective as the hon. Member for Central Ayrshire makes out.

On the two-child limit in universal credit, it is only right that we have a welfare system in which people who are out of work have to make similar decisions to people in work. However, it is extremely important that people in the welfare system understand the potential consequences. I have become concerned that there may be people who are thinking of having a third child but are not aware that they will not be entitled to further benefits under universal credit. The system cannot work as intended if people are not aware of how it works.