Universal Credit

Rachel Reeves Excerpts

Tuesday 10th December 2013 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions if he will make a statement on universal credit.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

This is a major and challenging reform which will transform the welfare state in Britain for the better, ultimately accounting for some £70 billion of benefit spending each year, with 3 million people better off.

Rightly for a programme of this scale, the Government’s priority has been, and continues to be, its safe and secure delivery. This has been demonstrated throughout our approach to date, which started with the successful launch of the pathfinder in April 2013 and has continued with the controlled expansion of universal credit, starting as planned in October 2013 and running through to spring 2014. What is more, we are already pushing ahead with the cultural and business change required as part of universal credit. We are retraining 25,000 Jobcentre Plus advisers while implementing digital jobcentres and rolling out the new claimant commitment, which is now on track to be in place in half of all jobcentres by the end of the year, and across the country by the spring.

Yesterday I announced and discussed at length with the Work and Pensions Committee our plans for the next stage of implementing universal credit, following my Department’s work over recent months with the Government Digital Service to assess delivery options. That work has explored the use of the latest digital technologies and assessed the utility of the work we have done to date—[Interruption.]

[Mr Duncan Smith]

The conclusions of this work were set out yesterday. First, as part of the wider transformation in developing digital services, the Department will further develop the work started by the GDS to test and implement an enhanced digital service. This will be capable of delivering the full scope of universal credit and make provision for all claimant types.

Meanwhile, we will expand our current service and develop functionality so that from next summer we progressively start to take claims for universal credit from couples and, in the autumn, from families. Once safely tested in the 10 live universal credit areas, we will expand the roll-out to cover the north-west of England. This will enable us to learn from the live running of universal credit at scale and for more claimant types, including the more vulnerable and the more complex, while extending to more people the positive benefits of universal credit.

It is important to note that the information that we are getting back from the pathfinder tells that 90%—I stress, 90%—of people are claiming universal credit online and that 78% are confident about their ability to budget with monthly payments. It also tells us— [Interruption.] I know that Labour Members do not want to hear about this, because they have been wrong on welfare reform from day one. The majority of people who are on the programme tell us that it pays to work, with 65% to 70% reporting that universal credit offers better work incentives than jobseeker’s allowance and is less complex—upheld by the 65% who agreed that it was easier to understand their obligations as a result.

As we progress with the future delivery of this flagship programme, we will continue the same careful approach—test, learn, implement—as it is rolled out through the regions. On this basis—[Interruption.] Actually, I am going to pick this point up. The shadow Chancellor is sitting on the Opposition Front Bench. I will tell you, Mr Speaker, what we will not do: we will not take any lessons from the party that rolled out tax credits early. It rushed the delivery of tax credits, which cost £5 billion immediately and 400,000 people suffered directly as a result.

Once we have closed down the new claims, we will test, learn and implement—unlike Labour when it rolled out its information technology programmes. The new claims to the legacy benefits that universal credit replaced have been closed down, with the vast majority of the remaining legacy case load moving to universal credit during 2016 and into 2017. Final decisions on these elements of the programme will be informed by the development of the enhanced digital solution.

[Rachel Reeves]

On 5 September, the Secretary of State told the House:

“We will deliver this in time and in budget”.—[Official Report, 5 September 2013; Vol. 567, c. 472.]

On 14 October, he said:

“Universal credit will roll out very well and it will be on time and within budget.”—[Official Report, 14 October 2013; Vol. 568, c. 429.]

And just last month, on 18 November, he said that

“universal credit will roll out and deliver exactly as we said it would.”—[Official Report, 18 November 2013; Vol. 570, c. 947.]

The Secretary of State must answer these questions. How on earth can this be on time when in November 2011 he said that

“all new applications for existing benefits and credits will be entirely phased out by April 2014”,

but we now learn that this milestone will be reached only in 2016? Will the Secretary of State confirm that this is a delay of two years? Will he also confirm that, even by 2017, 700,000 people will not be on universal credit?

How can the Secretary of State say that universal credit will be on budget when, even by his own admission, £40.1 million is being written off on IT costs? What budget heading was that under? The Secretary of State also revealed yesterday that another £90 million will be written off by 2018. Does this mean an additional IT system is having to be built?

The reset exercise began in February. On 18 November, the Secretary of State still claimed that there would be no delay to universal credit. At what point did he learn that there would be a delay of two years?

The underlying problem is surely that the Secretary of State has not resolved key policy decisions before spending hundreds of millions of pounds of taxpayers’ money on an IT system.

One of the issues that has a fundamental impact on whether people are better off in work is free school meals; so which recipients of universal credit will get free school meals—some, none or all?

The Secretary of State is in denial. Doubtless, he will deny that he is in denial in a moment’s time. But we all know that until he fesses up, no one will have any confidence in his management of this programme. It is no surprise that a source close to the Chancellor says:

“There are some ministers who improve in office and others, like IDS, who show that they are just not up to it”.

[Mr Duncan Smith]

Let me deal with a couple of the points raised by the hon. Lady. I said all along, and I repeat, that this programme essentially is going to be on time. By 2017, some 6.5 million people will be on the programme, receiving the benefits.

Let me deal with the hon. Lady’s comments about what is written down and what is written off. For somebody who was supposed to have been working for the Bank at one point, she does not seem to know the difference between equipment of no use that is being written off and equipment—this is the case in any company over a period of time—that is written down each year. That is exactly right. If she drives a motor car, I wonder whether she has noticed that, over a period of years, its value actually depreciates. Perhaps she has not; perhaps she is still trying to sell the car for the same value she bought it for.

The reality is very simple. Let us take the legacy systems right now. The legacy computer systems that are working were written down years ago, but they are still delivering value to the Government by delivering benefits. Maybe the hon. Lady needs a teach-in about the difference between written-off equipment and written-down equipment.

I want to deal with one other point that is quite clear and is the reality. We have been clear—[Interruption.]