Universal Credit Sanctions

Ruth George Excerpts

Monday 4th December 2017 Commons Chamber

[Jim McMahon]

That was my experience. We were working long hours and we relied on tax credits to be able to pay the rent and put food on the table. Through no fault of our own, we were trapped in a system that put blame and responsibility on to our shoulders, even though the fault was eventually proven to be that of the system. Families experience a great deal of stress when they do not have the necessary disposable income to satisfy all the demands that are coming in. That is the extremely difficult experience of people who are on universal credit.

I was in a secure job with a regular wage, and my hours were not changing all the time. I would fear being a universal credit claimant today if I were in insecure employment where my hours changed from one week to the next, where my employer would not give me certainty of employment or, even worse, where my employer would put me on a zero-hours or self-employed contract and I had to declare my earnings up front just in case there was an error further down the line. That does not strike me as a system that has been designed to help the claimant. It seems to have been designed to create a culture, and I believe that it is a corrosive culture. It is not a safety net to catch people, or a top-up benefit system that is meant to make work pay. It is a culture that talks about the deserving poor. It tells people that they are poor because of their own fecklessness or laziness, or as a matter of choice, not because they have been caught in a cycle of debt and despair. There also seems to be a grudging idea of what the welfare state is meant to be. People are told, “All right, we’ll pay you the money if we have to, but only if we really have to.” The culture that that creates is very dangerous for a country that has a long history of a welfare state.

More than 1 million working families will be £2,800 worse off under universal credit. Food banks have reported a 30% increase in referrals in areas with full universal credit roll-out. I want to talk about Greater Manchester, and particularly about Oldham. I want to take this opportunity to pay tribute to my neighbour, my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), for the leadership that she has shown on this issue. She will know from her constituency the depths of despair that people reach and the problems with the system, but some of these issues can be resolved, provided that the Government step back and listen to these concerns and take enough time to fix them, instead of going full steam ahead into a programme that they know has been built to fail.

We were one of the first pilot authorities, and we now have 4,000 claimants in Oldham. There are 49,000 claimants across Greater Manchester, nearly 20,000 of whom are in work. We have seen delays, mistakes and IT failures, on top of the deliberate decision by the Government to cut payments for those claimants who need them the most. Those things have real consequences. We have heard from Citizens Advice, the Greater Manchester law centre, my own local authority and directly from people working in job centres across Greater Manchester. We have also heard from a wide range of charities, including the Oldham food bank, which have seen scores of people—often referred by the Department for Work and Pensions itself—queueing for food vouchers for the food banks, just to get a basic supply to be able to live. My casework advisers are swamped and so are many of the charities. We fear the roll-out to the full 322,000 legacy benefit claimants, not for ourselves, but because we see what the scale of human suffering will be if the Government continue to fail to heed the warnings that the system is broken.

[Ruth George (High Peak) (Lab)]

Does my hon. Friend agree that it is particularly worrying that the sanctions regime is to be rolled out to people who are already in work? As he says, they are often in insecure work with varying hours, which will leave them open to benefit sanctions for reasons beyond their control.

[Jim McMahon]

That is important, because concerns have been raised about when people are underemployed and do not have enough hours for a full-time week and the Government require them to actively pursue work to make up the additional hours. They may be only one or two hours under the threshold, but they are still required to attend an interview. If they work for an employer that has no flexibility and would be happy for them to walk out the door, because there is a queue of 10 people who are willing to take the 35-hour-a-week job, perhaps they cannot get to the appointment or perhaps the employer will not give them the additional hours required to satisfy the jobcentre. That is a real example of what people are going through today.

In a recent survey, Citizens Advice found that 39% of people had waited for more than six weeks and 11% had waited for more than 10 weeks. We have a heard a lot about the need for welfare to mirror work. It ought to provide a smooth transition between employment, changing contract terms and earnings, and significant changes in circumstances, but at its heart it is part of the welfare state. It is a safety net to catch people when they fall on difficult times that helps them to keep their head above water. It is meant to help people, not treat them as undeserving or with suspicion and resentment. For a safety net to work, it must be there when people fall. It should not let people hit the ground hard and then make them wait six or 10 weeks before help arrives. That is not the spirt of a welfare state that people pay into through national insurance. It is an insurance policy, but it fails to be there when people need it. That is fundamental.

There is a contract in place between citizens and the state. If we collectively, through our common endeavour, pay national insurance contributions, that fund ought to be there when we need it. The Government have failed to honour that contract, as far as I can see, and people who pay into that pot have the right to be disgruntled and to question whether it is really there. I would like to believe that that is not what the Government want, but some of the benefits debates in the media are corrosive. We hear the language that gets used by the Government. We are now in a position where the Government would be happy for public support for the welfare state to fall away completely to give them a reason to take the axe even further.

When the banking crisis really hit, people in Oldham did not blame the bankers or the Government; they blamed their neighbours. They looked at the neighbour who had a slightly nicer car than them and wondered why they could not have a nicer car. They saw the people with their suitcases full who were getting into a taxi to go on holiday and asked why they could not go holiday. That is the cruelty. People on low incomes were set against other people on low incomes, and the Government got away with it. When bankers have not been taken to task and corporation tax cuts have been handed out, the axe has been taken to the welfare state that was supposed to support people.

Thirty per cent. of people have reported making more than 10 calls to the universal credit helpline before their application was processed, with many waiting more than 30 minutes. Up until very recently, they were also charged a high premium. Some 57% had to borrow money while waiting for their first payment. So far, 101 job centres covering 14% of all job centres in Great Britain operate universal credit full service, and we fear for what the roll-out really means. But this is more fundamental than all the facts and figures. I talked about how we collectively pay into the pot that should be there to support people, and I could go into a lot of detail about the sanctioning regime and just how unfair and inflexible it is and how it does not take people’s lives into account.

--- Later in debate ---

[The Minister for Employment (Damian Hinds)]

Time is a little short, but I will seek to address as much of what the hon. Member for Oldham West and Royton (Jim McMahon) raised as possible. I congratulate him on securing this important debate.

I will start by going over some of the principles of why we have conditionality and of how the system we have specifically designed in universal credit supports claimants in meeting conditionality. The hon. Gentleman went over some of the history of our benefit support system and, yes, the system is there to provide a safety net, but it is also a well-understood and long-standing principle that individuals must meet certain conditions to receive certain benefits.

It is possible, of course, to argue for a system of out-of-work support that does not have conditionality—something like a universal basic income—but that is not, to the best of my knowledge, the policy of the official Opposition or of other Opposition parties in this House. That would be a completely different debate.

Conditionality has been a long-standing feature of welfare benefit entitlements in this country, and the scope and scale of it has evolved over time. The introduction of jobseeker’s allowance in 1996 intensified the monitoring of unemployed claimants’ job seeking behaviour, and the incoming Labour Government of 1997 adopted what was called a work-first and work-for-all approach that embraced JSA’s monitoring of claimants’ job search activities, backed up by benefits sanctions in cases of non-compliance. Universal Credit is specifically designed so that work coaches engage with and support people early in their claim, and then throughout, to give them advice and support, and not to lose contact with them. With the introduction of the claimant commitment, it is clear to claimants what is expected of them. Through it, they commit to undertake certain actions, such as attending interviews, applying for jobs and apprenticeships, or going on training, in exchange for receiving benefits.

[Ruth George]

Does the Minister believe it is correct that a single parent of a 13-year-old child should have to sign up to a claimant commitment to seek work for 35 hours a week when they have a child to look after in the school holidays?

[Damian Hinds]

The claimant commitment is agreed between the claimant and the work coach, and it is based on the claimant’s particular circumstances. So where a mother is taking young children to school and back, the time she would have available to work and for work search would be restricted by that. Where someone has caring responsibilities for a spouse, parent or disabled child, that will also change the amount of time they have available. The point is that this is to be a tailored system that responds to and reflects the individual’s circumstances. The individual and the work coach between them agree what is reasonable, and the claimant then commits to it. As I was saying, work coaches have the flexibility to personalise the requirements—I have pretty much covered what I was about to say in that paragraph in responding to the hon. Lady.

Work coaches can also remove all work-related requirements where it is not reasonable to expect claimants to be able to comply, or suspend them temporarily, such as when someone needs time to find a home. We are constantly reviewing our guidance and ensuring that work coaches understand the importance of getting the right levels of conditionality in place, based on a claimant’s individual circumstances. Indeed, when a work coach takes up the role for the first time, they go through a minimum of five weeks of classroom-based learning, after which they consolidate that learning back in their jobcentre. This training covers conditionality and setting appropriate commitments for the specific circumstances of the claimant. Additionally, when a jobcentre goes live with the universal credit full service, existing work coaches there go through three weeks of classroom learning, which also includes how to apply conditionality and agree reasonable commitments. Similarly, work coaches can refer to extensive guidance on how to support claimants with disabilities and complex needs.

It is right that there is a system in place to encourage claimants to meet their requirements and, as a result, move closer to work. As such, if a claimant does not meet the requirements they have agreed to in their claimant commitment, they are referred to a decision maker to determine whether a sanction is appropriate. We take a number of steps to make sure our decisions are fair: the decision maker invites those referred for a sanction to explain why they failed to meet their requirements; and we take the claimant’s individual circumstances into account, including any health conditions or disabilities, and any evidence of good reason, before making a decision to apply a sanction.

Evidence from trials where there was no conditionality for the first 13 weeks showed a significant increase in the length of time spent on benefit. That was due mainly to people taking longer to find work. In addition, more than seven tenths of UC claimants said the potential for sanctions made them more likely to look for work or take steps to prepare for work.

A report from the OECD in 2013 also noted that the UK’s

“long tradition of activation policies to promote the effective reintegration into employment of working age benefit recipients helped limit the rise in unemployment, even during the global and financial crisis”.

When a claimant disagrees with a sanction, they can ask for the decision to be reconsidered. Following that, if necessary, they can appeal against the decision to an independent tribunal. Ultimately, where a sanction is applied, it can only deduct an amount equal to the claimant’s personal element of universal credit—that is, their standard allowance. It does not apply to the additional amounts they may receive in respect of having children, to cover housing costs or to help with the costs of disability.

We have a well-established system of hardship payments and, in universal credit, claimants are able to apply for a hardship payment from the time their payments are reduced through a sanction. Nevertheless, most claimants do what is expected of them and are not sanctioned. The latest published statistics show that at March 2017, 6.9% of people on universal credit had a deduction taken from their standard allowance as a result of a sanction.

The rate in universal credit is higher than the sanction rate for jobseeker’s allowance, but the two are not directly comparable. In UC, if a claimant fails to attend a work-focused interview without good reason they can be sanctioned, whereas if a claimant on JSA fails to attend a work-focused interview, after five days without making contact they would have their claim terminated. In the November statistics release, about two in every 10 adverse sanction decisions are for failing to attend, whereas under UC it is about seven in every 10. To repeat, it cannot be inferred from that that more people are not attending. Rather, it means that non-attendance is often treated differently because UC is a very different benefit that covers not just the individual element, but support for children, housing costs and other elements.

Universal credit is designed to support claimants in a holistic way, ensuring that we help them find or progress in work, while ensuring that they continue to receive help with their housing costs and other benefits. In universal credit, we are more likely to temporarily reduce benefit, for example where there is a complete loss of claimant contact, while we try everything possible to contact the individual. In jobseeker’s allowance—