Universal Credit and Working Tax Credits

Stephen Crabb Excerpts

Wednesday 15th September 2021 Commons Chamber

[Jonathan Reynolds]

I addressed that in an entire section of the speech so I refer the hon. Gentleman to Hansard.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

Actually, that is a really important point because the hon. Gentleman was guilty in his comments on the previous welfare system of looking at it through rose-tinted lenses. There were huge problems with the previous welfare system. It caught hundreds of thousands of families in poverty traps, and at every opportunity since 2010 the Labour party resisted our efforts to reform welfare, to make work pay and to provide better financial support for families in Britain.

[Jonathan Reynolds]

I have a lot of time for the right hon. Gentleman, as he knows, and he has been vocal in opposing the Government and we all have respect for that, but I must put a few things on the record in response to his intervention. The reductions in poverty under the last Labour Government were tremendous, and we did not even know how good they were until we got the evaluation, sadly a few years later when already so much of that had been taken apart. Of course there were problems with the previous system, but no one should try to claim that the last Labour Government were not a reforming Labour Government. As the right hon. Gentleman knows, after that Labour Government came to power a single parent did not have to go out and look for work until their eldest child was 16—there was no regime in the world like that—and Jobcentre Plus did not exist. So there was a lot of reform and the system was improved, but crucially—this is the big difference from the reforms of this Government—our reforms brought poverty down, brought more people into the workplace, and made this country stronger, more resilient and a better place for everyone. That is why, sadly, our record is overwhelmingly better than this Government’s.

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[Dr Coffey]

I am going to make some more progress and then I will come back to the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) and my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb).

Returning to the crux of the debate, the temporary £20 uplift was an important intervention to help people facing the greatest financial disruption to get the support they needed. It brought the universal credit standard allowance close to the level of statutory sick pay, the minimum amount required to be paid by employers for people who could not work.

In the Budget earlier this year, recognising that the country was still under restrictions, the Chancellor set out that we would continue covid financial support until autumn, several months after the country came out of lockdown. That helped many people stay on furlough and be connected to their employers as businesses gradually opened, and meant keeping that extra financial support for people on universal credit and tax credits for an extra six months. As our economy continues to recover, it is right that we are investing in jobs and skills to boost pay, prospects and prosperity for people right across the UK as part of our plan to level up and build back better.

[Stephen Crabb]

On universal credit, I have spoken to dozens and dozens of work coaches all over the country. Every single one of them has told me, without a shadow of a doubt, that universal credit is a better benefit than what was before. It is down to the enthusiasm and the skills of work coaches, to a large extent, that universal credit has been such a success during this very difficult period.

[Dr Coffey]

My right hon. Friend is absolutely right. We already had about 640 jobcentres. We are opening a further 200 by the end of the year, recognising that we need to support more people. Of course, work coaches do not just deal with helping people—people with disabilities and a limited capability to work—to get back into work. Work coaches do a wide variety of work to support some of the most disadvantaged and vulnerable. Again, I thank him for paying tribute to our work coaches. They will play a key role in the time ahead. Perhaps the hon. Member for Oldham East and Saddleworth would like to intervene now?

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[Dr Coffey]

I think it is fair to say that in the letter I saw that my six predecessors had signed—they are magnificent people and it is an honour to follow in their footsteps—they were keen to have the extra financial support that has gone into aspects of the welfare system and to help people in that way. It was not specifically about the £20 but about recognising, as has been said today, that there may be better ways of using that financing. I am conscious that the media may have reported that in a slightly different way and I am not going to put anybody on the spot. However, I think they valued the extra money that went in, and I want to continue to support people.

[Stephen Crabb]

Will the Secretary of State give way?

[Dr Coffey]

I will give way to my right hon. Friend, one of the co-authors, but I am conscious that the universal support, alongside universal credit, was a key element of their request.

[Stephen Crabb]

I am grateful to my right hon. Friend for giving way again; she is being incredibly generous with her time this afternoon. The central argument of the letter that we sent to the Secretary of State and other colleagues in Government was about trying to retain the investment in universal credit. There are different ways to spend that money. All the evidence that I have seen suggests that investing in the standard allowance gives us more bang for our buck in protecting families against poverty. It was really a last-ditch attempt by me and a number of my colleagues who had served in that Department to persuade the Government to hang on to the crucial extra investment that had been put in at the start of the pandemic and which has made such a powerful difference to so many poor families up and down the country over the last 18 months.

[Dr Coffey]

I thank my right hon. Friend. Anybody who has served in this office, including the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), will recognise, for the people we meet daily, as other hon. Members do in their constituencies, what a difference an intervention from a work coach or a decision maker can make to really boost people when they are at their lowest ebb. I do not know whether any hon. Members watched the series “The Yorkshire Jobcentre” on Channel 4. Our social justice team there go above and beyond in trying to help people who have been rejected by the rest of society to get their lives back on track. That is the sort of work we can do. I understand why my right hon. Friend is keen for the welfare budget to still be substantial in supporting such people.

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[Stephen Crabb (Preseli Pembrokeshire) (Con)]

I will keep my remarks fairly short. My views have not really changed since the last time we debated and voted on this issue. On that occasion I voted against the Government for the first time ever, because I felt so strongly about the course of action that we were intending to follow and the impact that it would have on workers on low incomes and their families up and down the country.

The truth about the pandemic is that it has not been a time of increased hardship for everyone. For the lucky few, it has been something of a gold rush; for large numbers of other people, it has been a period of reduced household expenditure and increased household savings. Many people have become richer during the pandemic. However, those are not the people we are talking about this afternoon. Many of the people we are talking about this afternoon carried on working throughout the pandemic. They did not enjoy furlough, or some of the comforts of working from home. Typically, these were people working in supermarkets, doing cleaning jobs or working in the care sector. I believe that as the modern Conservative party, we should be standing on the side of people like that: people who go out to work, who choose to work, and who want to improve their circumstances.

I was surprised when the standard allowance was increased by £20 a week; I had not seen it coming. I was delighted when it was increased, but I was surprised that it had been increased by that amount, and it was not immediately clear to me why the amount in question had been chosen. I must confess that I am not sure that the Government have been very clear about why they picked it, unless it constitutes a recognition that the standard allowance in March 2020 was too low to provide anything like a decent, respectable level of income replacement as an out-of-work benefit. It is that question of adequacy to which I think we will return time and again during the remainder of this Parliament.

I came to the view a while ago that the level of universal credit in March 2020 was too low. One of the key reasons that it was too low involved decisions that I was part of in 2015 to begin freezing that benefit and seeing the value of it eroded at the time. I used some of the exact same language and arguments when I was doing her job that my right hon. Friend the Secretary of State used this afternoon at the Dispatch Box. The assumption at the time was that we were in a time of almost full employment, and we assumed that there would be a virtuous cycle of wage increases and that people would be living demonstrations that work was the very best route out of poverty. That did not happen. Instead, we saw an increase in in-work poverty, and that fact should be profoundly troubling to those of us on this side who really believe that work is the best route out of poverty. I fear that we are in danger of repeating the same cycle of assumptions that were proved incorrect last time.

One reason that in-work poverty increased in the years leading up to the pandemic was, I am afraid, directly related to the fact that we had frozen the main rate of working-age benefits that supported families on low incomes. If we look at the data and the evidence, that conclusion is unavoidable. Anyone who thinks that we have generous benefits in this country is wrong. If we look at this internationally or historically, there is no way we can describe UK benefits as generous. We do not have generous benefits. I do worry—this has come across a bit in the debate this afternoon—about the view that if we can only make welfare just that bit tougher and more uncomfortable for the families who rely on it, we will get better engagement with the labour market and see more people going out to work. The evidence does not point to that either. It shows that a family living in destitution and with anxiety and mental health problems that are a direct result of their financial circumstances is less well able to engage with the labour market productively or to increase its earnings or its hours.

I know that the views of No. 10 and the Treasury are firmly locked down on this, but this is not going to be the end of the matter. We are going to keep coming back to talk about this issue for the remainder of this Parliament.

[Carla Lockhart (Upper Bann) (DUP)]

Will the right hon. Gentleman give way?

[Stephen Crabb]

I will give way just to give myself a bit more time.

[Carla Lockhart]

The right hon. Gentleman is certainly making a very valid point. Does he agree that, with one in four children in Northern Ireland growing up in food poverty and with 22% in fuel poverty, this proposed cut along with the increase in national insurance contributions will plunge people into further poverty and that the Government need to cease with this plan and support the most vulnerable in our society?

[Stephen Crabb]

The hon. Lady makes a strong point.

We on this side of the House do not believe that benefits alone are a route out of poverty. We emphasise things like work and the importance of education, but what a scandal it is that we are still churning out so many 16, 17 and 18-year-olds whom employers reject and do not want to see because they do not see them as fit for work. We also emphasise the role of communities and the importance of family structure and role models. These are all things that can help to move people out of poverty, and we are not wrong to do that. The Labour party is guilty of over-emphasising the important tool of social security, but I say to my colleagues on the Government Benches that we should not make the mistake of overlooking the importance of good welfare policy. This is not about being wet on fiscal discipline or about being Labour-lite. It is about recognising what is good, responsible social policy, and I am clear in my mind that this sudden, abrupt withdrawal of the £20 uplift that millions of families will experience in the coming weeks is not the right way of doing welfare policy.