Universal Credit

Sheila Gilmore Excerpts

Wednesday 6th March 2013 Commons Chamber

[Dame Anne Begg]

The Government’s whole point in doing this is to make the system easier, so hopefully it will be. If it is not easier at the end of the process, we really will have got everything wrong. In the process of introducing this fully, the Government will obviously have to address some of the concerns that hon. Members have raised.

The Government’s response indicates that they expect only 50% to claim online and about 5% to get face-to-face interviews, which means 45% will claim through the telephony system. Perhaps the Minister can explain the wording in the Government’s response. It states:

“Our target is that 50% of claims which can be made online will be made online in October 2013 when Universal Credit is launched nationally.”

I am not sure that I understand that sentence. Does it mean 50% of the total number of people who will make a claim, or 50% of those who can make it online, which will not be everybody. I am not exactly sure what proportion the Government are talking about.

The Government’s response mentions face-to-face interviews, which is good, but they are still for only 5% of cases, and they give not a hint about where the interviews might take place and what proportion of them are likely to be home visits. After all, a large number of people in the universal credit cohort will have severe disabilities. They might receive other benefits that they have claimed previously, but they will also be in the universal credit cohort.

I am also glad to see that jobcentres are to have IADs—internet access devices—which sounds great. The Government response trumpets the fact that there will be computers in Jobcentre Plus offices. However, if we divide the number of computers by the number of Jobcentre Plus offices, we find that it works out at about three terminals per office, and I am not sure whether that will answer some of the questions about access to computers. Also, it appears that wi-fi is not yet available in Jobcentre Plus offices, although that is planned, as it should be available. Many people do not have a computer at home and will need to access their claim form through a public-access computer, whether in Jobcentre Plus or not. They will need help, and the Government’s response is not very clear about that. It does say that staff will be available, but it is very vague: it does not say how many or how much time they will have. Jobcentre Plus staff are already overworked. Will they have the time to sit down alongside someone until they have filled in their whole claim, or will they just get the screen up and leave them to it? For many people, that would not be enough help.

The Government say in their response that they are liaising with local authorities to supply help. However, we all know that local authority budgets are already being squeezed year on year, and that a lot of welfare rights officers, where councils have them, are disappearing, if they have not already done so. There is also a squeeze on organisations such as Citizens Advice. This is such a big undertaking that it is incumbent on the Government to make sure that this help, of the necessary quantity and quality, is there and that people know how to access it. It has occurred to me that as some local authority staff will no longer be employed in administering housing benefit, they might be an experienced resource that the Government could call on to act as advisers in providing the help that many people will need to make an online claim.

Another big area of concern about UC is that it will be paid once a month into a single bank account for each household. The Government’s response says that the Secretary of State has powers to vary the frequency of payments, but this would be time limited. It also says that the Department for Work and Pensions will try to identify claimants with, for instance, mental health or addiction problems who might not manage monthly payments, but suggests that help will be provided for only a limited period. The Government seem to think that a drug addict will somehow be able to learn how to budget properly after a couple of months. The essential problem is that getting a whole month’s money in their hand at once might be too tempting. I do not think that what the Government describe as “transition to monthly payments” after

“getting help with monthly budgeting”

is going to work in practice. Will the Minister clarify that?

[Sheila Gilmore (Edinburgh East) (Lab)]

As the Chair of the Select Committee, my hon. Friend knows, but I suspect that other people do not, that we have been hearing evidence about the apparent lack of information held by Jobcentre Plus about people’s circumstances in relation to being placed in the Work programme. Jobcentre Plus may therefore be unaware that people are homeless or have other difficult circumstances. What confidence does she have that it will be any better for the purpose of working out which people need this additional help?

[Dame Anne Begg]

I am worried that the Government say bluntly in their response to our report that they are not going to provide a definition of a vulnerable claimant. Without that, it will be difficult for Jobcentre Plus to identify the individuals who need help. This is our biggest area of concern. We do not know whether someone will need to get into trouble before they can get help rather than already having been identified as needing it.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

When the Welfare Reform Bill was in Committee, the Minister’s predecessor was fond of the bookcase analogy. We were constantly told that what we were dealing with at that time was an empty bookcase, which would shortly be filled. Ministers and some Government Members who have intervened in the debate today, rather than those who have spoken at length, tend to feel that because most commentators, interest groups and parties think a unified system that will take people from unemployment to employment is in itself a good thing, that somehow means we should not be critical of the policy or its contents.

We have reached a point where some of the books have appeared on the bookcase, but there are still large gaps, some of which may not be filled until the roll-out takes place. We should realise, and the Minister should appreciate that, as I understand it—he may correct us—the initial pathfinder will deal only with very simple cases and people who do not have any complicated family situations, so it will test only some elements of the system. After that, more books will doubtless appear. However, one can have the same bookcase as someone else yet disagree radically about what books to put in it. We need to have that debate.

We must be careful not to oversell the reform. Although we talk about universal credit as though it will be simple, in reality universal credit will have lots of arms and legs. It is an umbrella, so to speak, with lots of arms and legs, because there will be different categories of people who fall under this umbrella, who will have to meet different eligibility criteria, who will receive very different payments and elements of payments, and who will be subject to very different conditions in order to get their benefits.

There will be a series of different types of universal credit. I would not be at all surprised if, in a couple of years, for convenience, particularly those who work in the field will refer to employment support allowance universal credit applicants or unemployed universal credit applicants. Otherwise it will be difficult to explain the situation. Universal credit will not be and perhaps cannot be simple. We on the Opposition Benches have said repeatedly that simplification is not the be-all and end-all when one is dealing with people who have complicated lives.

We have to put the financial capacity to deal with monthly payments in place. The Minister may remember that during his previous incarnation in the Treasury we had a debate about basic bank accounts. One of the issues I raised with him in his previous role was the need to extend basic bank accounts and to make it compulsory for banks to provide them. He resisted that move at the time. He may come to regret that in his new role in the DWP because it might have been better if there were a better raft of basic bank accounts that people could access. The number of banks offering basic bank accounts has not grown in the past nearly three years; it has diminished. Where will people be able to have the moneys paid to? Will they be able to get such bank accounts? There are people who cannot access basic bank accounts, either because there is no bank in their vicinity that offers them, or because they are not allowed to have such an account for one reason or another.

[Dame Anne Begg]

There are indeed difficulties getting a basic bank account, but does my hon. Friend accept that there are also people who have had a bad experience with banks, particularly with direct debits, and found themselves overdrawn and incurring lots of charges, and who therefore do not want to use a bank account to manage the money they get through universal credit?

[Sheila Gilmore]

My hon. Friend raises another important aspect. People have run up large bank charges, often inadvertently, on a very limited income. They might decide not to use the bank account any longer because that is easier, or the account may even be suspended.

Many warm words have been spoken about credit unions, but if we are honest about it, in most parts of the UK—the situation might be slightly different in Northern Ireland—credit unions are pretty small and cover only a relatively small part of the population. If we seriously wanted to increase their use, we would have to fund that properly and give them some ability to expand to the extent required. I would be more than happy to direct constituents in that sort of difficulty to a credit union, but I know that the credit union serving the local area currently has very limited capacity to expand. We have to think about that extremely seriously.

Another question considered today was that of the direct payment of rent. There are six demonstration projects, and indeed a report was published some time ago, but it was what the researchers called a baseline project report. In other words, it effectively looked only at people’s attitudes and capacities before the project got going; it proves nothing about whether it is working. Further data published by the DWP in December 2012 showed that in four months 8% of rent had not been collected. At that stage, 316 tenants had already been switched back to direct payment to the landlord, and the range of collections was actually greater than the 92% would suggest. In one project in an Edinburgh housing association, 63 of the 1,832 tenants were switched back to direct payments in the first four months, which I think is a substantial portion in a relatively short period.

It also appears—this will have to come out in the research very clearly—that some of the pilots have excluded some of the people most likely to fail. The pilot in Oxford apparently excluded those considered to be vulnerable, and the one in Wakefield excluded those who did not already have a bank account, so some of the difficult cases have not been included. That is fair enough in a pilot, but those cases must be taken into account before it can be claimed that all will be fine when this is rolled out more fully.

Members have spoken at length about the “digital by default” approach. I am not a luddite. I think that moving towards online claiming, wherever possible, is a good idea. In fact, when I was the convenor of housing on City of Edinburgh council we started a choice-based lettings system. It was possible to apply through a newspaper, people could fill in a form in the more traditional way, or they could apply online. Some people, including tenants’ groups, told us that we could not do it online because people would not be able to access it. We replied that we were giving people the choice. The online take-up was actually higher than many people had feared. Some of them will be getting help to do that, and that is the distinction we have to see.

There is a problem with the top-line figure, which is constantly quoted, of 78% for the proportion of claimants who already use the internet. It is drawn from research done for the DWP. It revealed that 78% have used the internet, but only 48% said they used it everyday, and that includes people in work, on tax credits and right across the whole spectrum. When we break the figures down, we see, for example, that 60% of people who are in receipt of incapacity benefit said that they had used the internet, but only 31% used it every day. There are some important distinctions within these groups.

If the new system frees up more adviser time, that can only be a good thing, but we need to know that that is really going to happen and where it is going to happen. The current situation appears to be quite stressed already. I have been told, and claimants’ experiences tend to back this up, that in Jobcentre Plus in my city people barely get four minutes with an employment adviser. Time is very stretched as it is.

[Helen Goodman]

Does my hon. Friend agree that another problem is that the voluntary sector advice agencies are also suffering from a shrinkage of resources? For example, the citizens advice bureau in Spennymoor in my constituency has only a third of the level of resources that it had two years ago.

[Sheila Gilmore]

There is undoubtedly a reduction in resources. Many of the advice agencies that I have contact with are having to tell people that they cannot get an appointment for three weeks, or even four.

[Dr Whiteford]

Does the hon. Lady welcome the fact that in Scotland Citizens Advice has had an increase of £5.7 million in recent weeks to cope with that situation?

[Sheila Gilmore]

I certainly do, although I rather regret that that money was so long in the coming given that it was available to be paid out some couple of years ago—but better late than never.

Finally, I want to discuss a particular group—single parents. Some of the problems I am going to consider do not necessarily result from universal credit as such, but they will not be cured by universal credit and may even be made worse. For many single parents, getting back into work is not easy. There is a great deal of evidence that many of them, when they do find work, find that it is low-paid and low-skilled work. There is a high level of churn because of the type of work or because of the practical difficulties that can arise. They may find that arranging child care is unexpectedly expensive or difficult—for instance, when they run into the summer holiday problem. All these things can lead to a single parent who wants to work finding a job and doing it for a period, but then having to leave and go back to the beginning again. Skilling up is particularly important.

Over the past few years, including under the previous Government, there have been several changes to the rules for single parents, particularly about their registering for work once their children reached certain ages. Considerable flexibilities were built into the system whereby, for example, a single parent would not be required to apply for a job, go for a job interview or take a job where it would not fit with their child care responsibilities. There are several such flexibilities, none of which, bar one, are in the new regulations that have been produced for universal credit. They are in guidance, but the problem is that guidance is not legally binding and these matters are at the discretion of an individual adviser.

There are currently 12 flexibilities, only one of which has been migrated into the new regulations in its entirety; the other 11 are not there or have been very much qualified. For example, under the regulations a single parent is still able to restrict the hours they work, but only if they can demonstrate that there are jobs with those hours available locally. If there are not, they cannot have that flexibility, so presumably they will have to look for a job that does not accord with their child care responsibilities or look for one outwith their area, which creates a whole new set of difficulties. Anyone who has had to pick up their child from nursery at a fixed time and has experienced the reception they get when they arrive back late because the bus has been delayed will know that working a long distance away is not easy.

It is not at all clear why these changes are being made. They might make it more difficult for single parents to get back into work. If the flexibilities are not there, the other problem that arises is sanctions. If people do not have those flexibilities, they may be required to take on a job—or to refuse a job—that does not meet their needs. If they refuse to take the job, they can be sanctioned. The level of sanctions was increased substantially in the Welfare Reform Act 2012 and the number of people who are being sanctioned is increasing. We are all seeing those people already. I would like the Minister to explain why the decision has been taken not to put the flexibilities for single parents into the regulations.

Gingerbread, which represents single parents, feels that getting skilled has been made more difficult of late. Again, there does not seem to be anything in universal credit that will help that situation. Previously, a single parent with a very young child who was on income support got a fee remission if they did a college course. That fee remission has been removed, so although a single parent with a child under five can still do a college course if they can fit it in around everything else that they are doing, they have to pay for it. When they hit the requirement to sign on for JSA, they will get fee remission for a course, but if a job offer comes up that they have to accept, they will either have to drop the course, which they might be part-way through, or continue the course and be sanctioned. That is not the way to upskill people. Gingerbread has proposed that a single parent who is undertaking a further education course, up to and including level 3,

“should be treated as fulfilling work search and work availability requirements”

until their youngest child reaches the age of seven or the course ends. That is a practical proposal.

There is serious concern that the structure of universal credit, far from enabling single parents to work, will not be of great assistance and might even be harmful. The Gingerbread report, “Struggling to make ends meet”, with which I am sure the Minister is familiar, points out that a single parent who is earning the minimum wage cannot expect their disposable income to increase by much once they start working 10 hours or more. We are talking about very short hours. For anyone who does not understand, we are not talking about 10 hours a day, but 10 hours a week. Somebody who works only three, four, five, six or seven hours a week will be better off under universal credit, but because of the structure of it, once they are working 10 hours a week or more, they will not be much better off. For all that has been said about universal credit making people much better off and encouraging them to go into work, the structure is not quite as good as has been made out.

[Kate Green]

I am grateful to my hon. Friend for drawing attention to that problem. Does she agree that it is therefore especially unfortunate that in-work conditionality will propel that lone parent to increase her hours or, in other words, propel her into diminishing returns for her work?

[Sheila Gilmore]

I thank my hon. Friend for that intervention. The concept of in-work conditionality, which is new to the UK, needs to be fleshed out considerably as universal credit rolls out. It is not at all clear how it will work. It appears to mean that if somebody is working a low number of hours, they will be expected to look for more hours or for a different job in which they can work more hours. It will be open to the DWP to tell people that they have not made enough effort to do that and to sanction them for it. That is supposed to make people better off; it is supposed to be good for them to go through such a process, but if it does not make them better off, it feels more like punishment than assistance.

The report also looked at single parents who are not on the minimum wage but earn a median salary, and it was calculated that they would be worse off working full time than part time. They would not simply be no better off, they would actually be worse off as their hours increased. Again, that undermines the Government’s pledge to make work pay. Part of the reason for that concerns things such as child care costs. The cap on reimbursable child care costs has not been increased, and those costs are rising rapidly in many places. That has a marked effect on whether working longer hours and increasing earnings makes work pay.

Single parents are just one group that will be involved in this massive upheaval that will either create something completely different, or might lead to something that does not look very different at the end of the day—I am not sure which. There will still be many different categories of people, and the problems that we know about such as eligibility, and issues such as employment and support allowance and the work capability assessment that we have frequently discussed in this House, will not go away with the introduction of universal credit but will be tucked inside it.

I urge the Government to look at some of those issues and not simply to sit behind a general statement that universal credit will make work pay and that people will be better off. They think that if they keep asserting that and say it often enough it will happen, but it will happen only if we get the books right on the bookshelf.