Universal Credit: North-West

Debate between Rebecca Long Bailey and Marie Rimmer

Wednesday 13th January 2016 Westminster Hall

[Marie Rimmer (St Helens South and Whiston) (Lab)]

I beg to move,

That this House has considered the effect of the roll-out of universal credit in the North West.

It is a pleasure to serve under your chairmanship, Mr Nuttall. This is the first Westminster Hall debate that I have secured, and I will endeavour to observe the correct procedure. I am pleased to have secured this debate on such a critical subject for my constituents in St Helens South and Whiston and for people across north-west England.

I am sure that no hon. Member would disagree that the recent debate on changes to tax credits has been one of the most important in this Session. Following pressure from Members on both sides of the Commons, the Lords and the public at large asked the Government to think again. The Chancellor announced in the autumn statement that planned changes to tax credits had been scrapped, saying:

“I have listened to the concerns. I hear and understand them. Because I have been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether. Tax credits are being phased out anyway as we introduce universal credit.”—[Official Report, 25 November 2015; Vol. 602, c. 1360.]

However, for many people in the north-west of England the change to universal credit is a reality. The huge changes to our social security system have been trialled with people in the north-west.

Simply because of where they happen to live, many people in my constituency and neighbouring constituencies face dramatic drops in income from April 2016. For 77,378 people in the north-west, or 53% of the 155,000 currently in receipt of universal credit, this is a deeply worrying time. Some 51,000 of those people are in employment, and any of them experiencing changes that warrant a fresh application are seriously concerned. That issue of reduced work allowance is at the forefront of the minds of my constituents and the constituents of many other Members. I urge the Minister to take that away and think again.

The Office for Budget Responsibility expects the universal credit case load to be 330,000 in 2016-17, and many of those claimants will be in the north-west as those who get into work go on to universal credit. If families move from tax credits as part of their managed migration, they will be eligible for transitional protection until such time as their universal credit award catches up or the family experiences significant change to their circumstances. Transitional protection will apply only to families moved over through managed migration. Details on transitional protection have not yet been announced, and I ask for transitional protection to be put on a legal footing.

We know from the House of Commons Library that there will be no transitional protection for lone parents aged 25 or over with two children and no housing costs who are working full time—35 hours a week—on the minimum wage in 2015-16 or on the Government’s national living wage in 2016-17. Such a family will lose £2,384 in 2016-17. The same family with the housing element of universal credit will lose £309, and a disabled family with no housing costs will lose £3,000. Many families will face drops in income of between £2,000 and £3,000. That is the effect of these cuts on those whose circumstances have changed and warrant a fresh application.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

Does my hon. Friend agree that, with cuts to universal credit already being planned, there will be greater demand for transitional funding when current tax credit claimants are migrated on to universal credit?

[Marie Rimmer]

Yes, there will. How can it be right that anyone should be subject to a great injustice based on a postcode lottery determined by arbitrary decisions and the serial failings of the Department for Work and Pensions in delivering the programmes thus far? We have all heard the arguments on tax credits, and Members on both sides of the House were in agreement. Surely the change of terminology to universal credit from tax credit does not justify or warrant these cuts. It is simply indefensible that some people should be cast aside in this incompetent administrative experiment.

We have experienced other issues during the roll-out of universal credit. It would be unreasonable to assume that such a large scheme could be implemented without hiccups and a certain level of teething problems. The Government were forced to slow down the roll-out of the programme dramatically compared with their original aim. The OBR forecast in March 2013 that there would be 6.1 million claimants, but it is now expected that 330,000 people will receive universal credit during 2016-17. However, the problems that we have experienced in the north-west go well beyond what could be put down to normal problems that can be ironed out as the system beds in.

A range of administrative issues have had a terrible impact on people in receipt of universal credit. Many of the issues were highlighted in a report by Citizens Advice published in the summer of 2015. That report, “Waiting for Credit,” was drawn from 16 citizens advice bureaux, the majority of them in the north-west, including St Helens CAB. It detailed a range of issues faced by people claiming universal credit and by those trying to access it. For instance, universal credit is paid monthly in arrears. Following a new claim, the aim is for the claimant to be paid within five weeks—that is a total of nine weeks. The time lag causes claimants huge short-term financial difficulties, even when that aim is adhered to. However, the report found that 30% of claimants had to wait even longer.