Universal Credit

Sharon Hodgson Excerpts

Tuesday 13th March 2018 Commons Chamber

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

These regulations will affect millions of families up and down the country, so it is only right that we are able to discuss them today. The Government consulted from November to January on introducing an earnings threshold that would restrict free school meals to families with net earnings under £7,400 per annum. The consultation received 8,981 responses. However, the Government excluded 8,421 of those responses from their analysis, meaning that fewer than 4% of respondents agreed with the Government. Surely that goes against every rule of public consultations. Talk about statistics being used against vulnerable people!

In 2010, the then Secretary of State for Work and Pensions promised in the White Paper on universal credit that it would

“ensure that work always pays and is seen to pay. Universal Credit will mean that people will be consistently and transparently better off for each hour they work and every pound they earn.”

[Stephen Timms (East Ham) (Lab)]

I am glad that my hon. Friend has picked out that point. She will have heard the Secretary of State saying that jobcentres would advise people not to take extra work or to get a pay rise because they would end up worse off. Is that not absolutely contrary to the whole principle of universal credit that she has just read out?

[Mrs Hodgson]

Yes, absolutely. We know that the Government are today reneging on the former Secretary of State’s commitment.

Free school meals are worth far more to a family than £400 a year per child. That might not seem to be a lot to some hon. Members, but to those families it is an absolute lifeline. By introducing a £7,400 threshold for eligibility, the Government are forcibly creating a cliff edge that will be detrimental to families, especially children. To give just one example, someone with three children in their family who earns just below the £7,400 threshold is set to lose out on £1,200-worth of free school meals if they work only a few extra hours or get a pay rise. The Opposition’s proposal would simply remove the huge cliff edge and the work disincentive for families who most need support. It would take away the barrier to working extra hours or seeking promotion. Our proposals would therefore make work pay. The Government’s proposal is in fact the new 16 hours, which they said was a disincentive.

[Mike Hill (Hartlepool) (Lab)]

Is my hon. Friend aware that in Hartlepool, where universal credit is not being rolled out—it is already in—more than 1,000 children are being denied free school meals on the basis of the new proposal?

[Mrs Hodgson]

Yes. We can all cite the numbers from our constituencies. Even Conservative Members need to think about what they are doing to some of the poorest children in their constituencies. In the example I just quoted, the family’s annual wages would need to increase from £7,400 to almost £11,000 to make up for what they would lose by rising above the eligibility cliff edge. That problem did not occur under the old tax credit system, because that provided an offsetting income boost at the point at which free school meals were withdrawn. However, there is no equivalent mitigation under universal credit.

The Children’s Society has been much maligned today and has been cited as giving duff statistics—Conservative Members should be ashamed of themselves. It estimates that the cliff edge will mean that a million children in poverty will miss out on free school meals once universal credit is fully rolled out. They will miss out on something that is crucial for their physical and mental development.

The Government have said that 50,000 more children will benefit by the end of the roll-out in 2022, when the transitional protections are at capacity, but I and many others struggle to understand how that can be the case. Parliamentary questions tabled by my hon. Friends and others have gone unanswered, and the Government cannot just pluck figures out of the air, as they claim so many others have done. At least we can back up our claims with evidence from the Children’s Society, Gingerbread, the Child Poverty Action Group and Citizens Advice, all of which agree that this statutory instrument would take free school meals away from a million future children—[Interruption.] It would. If the SI does not come into force, a million more children will receive free school meals—[Interruption.] Conservative Members can shake their heads all they like.

During my recent Westminster Hall debate, I offered Ministers a solution that would mean that all children in universal credit households would continue to receive free school meals. As somebody asked earlier, I can say that it would cost half a billion pounds—not a huge cost to feed over a million of the poorest children. My proposal would see around 1.1 million more children in years 3 and above from low-income families receiving free school meals compared with under this change.

[Heidi Allen (South Cambridgeshire) (Con)]

If we were to maintain free school meals for absolutely everybody on universal credit, does the hon. Lady think it would be right to prioritise those coming from the legacy tax credit system, who could be earning up to £50,000 a year, instead of opening up eligibility and getting free school meals to more children in poverty?

[Mrs Hodgson]

I am running out of time, so— [Interruption.] Perhaps Conservative Members would let me finish before they use up all my time. I was going to say that while I cannot go into the full details, because of the time, I understand from the Children’s Society that a small number of people are getting up to £40,000. Those people are in large families with severely disabled children. The large amount of money is down to how much they receive for those children. It is disingenuous to use that as an example and to make out that all those families are receiving that amount.

The Minister claimed yesterday that my proposal would result in around half of all pupils becoming eligible, increasing the figure to 3.3 million children. Even the much-cited Channel 4 FactCheck article states that our proposal would extend to 1.1 million children, making the total 1.8 million children. When we talk about facts, Conservative Members need to get their facts right. Where do the extra 1.5 million children come from?

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[Stephen Timms (East Ham) (Lab)]

I want to focus on a single point. The proposals for eligibility for free school meals are catastrophic for work incentives in the welfare system. The right hon. Member for Chingford and Woodford Green (Mr Duncan Smith)—I am sad to see that he is not in his place—used to tell us that the central point of welfare reform was to improve work incentives, but these proposals rob universal credit of its most attractive feature.

The Secretary of State for Education used to be in charge of universal credit, but this is not so much a criticism of him as a criticism of his predecessors. Ministers in the Department for Education have had seven years to solve the problem—admittedly, it is difficult and technical—of how to define eligibility for free school meals against the backdrop of universal credit. Instead of solving the problem, they have simply adopted a very lazy solution. In doing so, they are creating a very big problem for work incentives in the welfare system. One day, future Ministers will have to resolve that problem. It is disappointing that under the leadership of the Secretary of State, who understands universal credit as well as anybody, they have gone down this very lazy line.

My hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) has just quoted from the universal credit White Paper, which sets out the philosophy that underpins the new benefit. I will quote another bit from chapter 2, which makes clear the principle that

“increased effort will always result in increased reward.”

That is what UC is supposed to be about, but under these proposals that will not the case. As we have heard, the Secretary of State for Work and Pensions told us that, when someone is just below the threshold, the jobcentre will advise them not to put in any more effort, not to get a pay rise and not to put in more hours. The jobcentre will recognise that, if they were to do that, they would end up worse off.

[Mrs Hodgson]

Does my right hon. Friend agree that this just reintroduces in a different guise the much maligned 16-hour threshold, which the Government said this was all to do away with?

[Stephen Timms]

My hon. Friend is absolutely right about that. The whole idea about UC was that it was supposed to get rid of cliff edges and benefit traps, but instead it is introducing a benefit trap far bigger and far worse than anything in the old benefit system. This is completely scuppering the whole purpose of UC. If it is true, as the Secretary of State told us, that jobcentre coaches are going to say to people, “No, don’t take on extra work. Don’t get a pay rise. Don’t go for more hours because if you do, you will end up worse off,” how are people supposed to progress? Surely all of us would recognise that the point about this system is to encourage progression, not to have bureaucrats telling people, “Oh no, don’t progress because if you do, you’ll end up worse off.” This is a catastrophic holing of the whole purpose of UC, and it is not as though only a few people will be affected.

The prospectus was that UC would solve all these cliff edges and benefit traps, but instead it is creating one that is much bigger. It has been calculated—I am indebted to the Children’s Society for this calculation—that more than 1 million people will be caught in the trap if these proposals go ahead. I will explain to the Education Secretary exactly why that is; he can read this in briefing the Children’s Society has provided. Some 280,000 families are affected, containing between them more than 700,000 children. Among those are 125,000 families earning below the threshold who risk being worse off if they take on extra work or get a pay rise, as the Work and Pensions Secretary recognised. In addition, there are 150,000 families earning above the threshold who would be better off if they reduced their earnings to below the threshold, so that they would then qualify for free school meals. What sort of system is that? Everybody will recognise that we do not want a welfare system that puts people in that position, but that is the system we will end up with if this statutory instrument goes through. The Children’s Society calculates that almost 21,000 families—containing more than 80,000 children aged eight to 15—who earn more than £7,400 would be better off if they cut their earnings to below the threshold to qualify for school meals. This is a catastrophic arrangement.

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[Laura Pidcock]

I have 17 seconds left and there have been so many interruptions.

[Mrs Hodgson]

My hon. Friend is making an excellent speech. As a fellow north-easterner, I want her to be able to finish her point.

[Laura Pidcock]

There are 2,000 children in my constituency who rightly receive subsidised school meals. The reason that new claimants after 1 April will not be protected is not that they no longer need that protection or need those meals; it is due to arbitrary cuts. This change will ensure that more children are in poverty and that more people have to access food banks. The Government may be able to justify that in this Chamber, but how can they justify it to a child? Taking all the proposed changes together with all the changes that have already happened to the so-called social security system, the only conclusion I can draw is that there is no security anymore. That is not embellishment: I know poverty when I see it staring me in the face in my constituency surgeries. We do not need to lie, we do not need to embellish. The truth is good enough: these changes are shambolic.

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[Mrs Hodgson]

My hon. Friend mentioned decoupling the pupil premium. Under the Digital Economy Act 2017, that is now possible. Schools already know how to claim pupil premium for the universal infant free school meals offer. Does she agree that we are totally able to decouple the two?

[Ruth George]

Absolutely. I thank my hon. Friend for her intervention. In a Westminster Hall debate a few weeks ago, Conservative Members said it was because of the cost of the pupil premium that they did not want free school meals extended, and that we could therefore set the pupil premium at the level proposed by the Government. We must, however, make sure that every child in poverty is entitled to the free school meals they need so that they have a better chance in school and better life chances, and to ensure that we try to eradicate child hunger instead of increasing it.