DWP: Performance

Stephen Doughty Excerpts

Monday 30th June 2014 Commons Chamber

[Rachel Reeves]

What we do know is that more than 5 million people—20% of the work force—are paid less than the living wage. Furthermore, 1.5 million people are on zero-hours contracts and 1.4 million people are working part time who want to work full time.

When it comes to detailing the extent of the Secretary of State’s dereliction, it is hard to know where to start. For a useful overview, we need look no further than the Department’s own annual report and accounts for 2013-14, which was released at the end of last week. It reveals the latest opinion of the DWP’s head of internal audit—that the Department has yet to take the necessary action to “address control weaknesses” and, in his words, to

“provide an improved…environment from which to manage the continuing challenges and risks faced by the Department.”

It lists no fewer than eight areas described as “significant challenges” where the Department still falls short. Universal credit, we are told,

“continues to be a significant challenge for both the Department and delivery partners”,

and it goes on to say that

“there continues to be an inherent level of risk contained in the plans.”

On fraud and error, we are told that the rate has “worsened” with respect to housing benefit and that the chance of the Government achieving their target for reduction

“remains a very substantial challenge and is unlikely to be achieved.”

The report confirms that in the area of contracted-out assessments for employment and support allowance and the new personal independence payments,

“the volume of assessments undertaken by providers…has fallen consistently below demand, with a detrimental impact on customer service and implications for forecast expenditure on sickness and disability benefits”.

In other words, it is hurting, but it certainly is not working.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend is offering a stark indictment of this Government’s policies. Does she agree that another stark indictment of their policies is the massive increase in food banks across this country, another one of which I had to open in my constituency just a few weeks ago?

[Rachel Reeves]

I totally agree with my hon. Friend. Of course, these remarks are from the Government’s own report. In our constituencies we all see people who are so desperate that they have to queue at food banks to be able to feed themselves and their families. That is not something that should be happening in 21st century Britain.

Oral Answers to Questions

Stephen Doughty Excerpts

Thursday 13th March 2014 Commons Chamber

[Mr Vaizey]

The hon. Gentleman makes a valuable point. It is important that we recognise the contribution to world war one made over a wide range by many different groups. Recognising the contribution made by hon. Members is particularly apposite.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

4. What steps she is taking to increase supporter engagement with football clubs.

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)]

Supporters are key to the success of any football club and I commend their active engagement in the sport. My Department works closely with Supporters Direct and the Football Supporters Federation, and will of course continue to do so.

[Stephen Doughty]

I thank the Minister for her answer. I should like to put on record my membership of the Cardiff City Supporters Trust and the Cardiff City Supporters Club. Given the importance of emblems, colours and club names to national heritage, what consultations does the Minister think should take place as a matter of course with supporters’ representatives if any changes to those elements are proposed? Does she think that that should form a key part of future licensing arrangements for football clubs?

[Mrs Grant]

The role that supporters play is critical, and I am encouraging the football authorities further to develop their relationships with supporter groups. As the hon. Gentleman knows, financial support is made and supporter liaison officers are in place. The offer of secretariat support for the expert group that I have mentioned is also a welcome move, but more needs to be done.

Food Banks

Stephen Doughty Excerpts

Wednesday 18th December 2013 Commons Chamber

[Laura Sandys]

I entirely agree. There are extraordinary people—committed volunteers—in my constituency.

Poorer families in my constituency also face structural poverty. Some families in private rented accommodation have no cookers and are captured by microwaved food, condemned to eat expensive food with no resilience, while others have to feed families of three or four with only one ring on which to cook. We must do something about the quality of our private rented accommodation.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The hon. Lady is raising some very interesting issues. However, I have been told by the Trussell Trust in Cardiff that half the people who have been referred to a food bank in the last six months were referred because of changes or delays in social security payments, unemployment, debt, low incomes, homelessness or domestic violence. Is the hon. Lady not surprised that Ministers are not willing to take a shred of responsibility for that?

[Laura Sandys]

That is not so, but the point is that there are numerous background issues for us to address, including education. Where was food education on the agenda before this Government included it in primary school education? It is now at the heart of citizenship. We think it important to build, in the long term, resilient families who can support themselves during a period of change and rising food prices.

Finally, let me say something about the food sector itself. I have campaigned strongly against what we are now seeing throughout the retail sector: shrinking products, promotions that are not really promotions, and even the selling of horsemeat, which is an example of food crime. I urge the Government to set up a cross-departmental taskforce to examine the issues involved in food poverty and develop a resilient set of policies to address the problem that food banks are creating. We need to improve housing and our skills base, and enable the food system itself to support communities throughout the country that are finding prices difficult to manage. We have a wide range of volunteers in the food sector who are supporting food banks in the short term, but we must start looking for long-term solutions. I wish that the motion had focused more on the long term and the strategic problems that we face, and less on short-term tactical politics.

--- Later in debate ---

[Rachel Reeves]

Sanctions, delays and the bedroom tax are all contributing to the increase in the number of people having to turn to food banks. Today we heard the powerful human stories behind the statistics.

[Stephen Doughty]

I have compared the use of food banks in my constituency in the festive period over the past two years. In Cardiff the number has doubled since last year, and Penarth has seen an eightfold increase. Is not the real tragedy that this is also a Christmas crisis for food banks?

[Rachel Reeves]

Yes, and although my hon. Friend refers to the festive period, for many it will not be festive at all.

A fortnight ago a young women with an 18-month-old daughter came to see me in my constituency. She had left her ex-husband to escape domestic violence but was worried sick because the benefits office had cut off her benefits when her ex-husband falsely claimed to have custody of her child. She has been waiting for weeks without any support while it fails to rectify the mistake. Without the food banks in my constituency, run by St George’s Crypt, St Bartholomew’s church in Armley and the Trussell Trust, that woman and her daughter would have gone without food. She has been badly let down by this Government and by their delays and sanctions.

Housing Benefit

Stephen Doughty Excerpts

Tuesday 12th November 2013 Commons Chamber

[Lucy Powell (Manchester Central) (Lab/Co-op)]

It is an honour to follow the hon. Member for Meon Valley (George Hollingbery) and my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), who made an excellent contribution.

I am pleased to be called to speak in this debate and I am proud that the Labour party now has a commitment to axing this appalling policy. I am proud of Opposition Members’ contributions to this debate, which stand in stark contrast to some of the drivel we heard from the Government Benches, much of which showed a lack of understanding of and basic research into how this policy is being delivered on the ground.

One example of that was in the contribution of the hon. Member for Suffolk Coastal (Dr Coffey), who said people should simply work an extra three hours a week to pay for this. If she knew the policy, she would be aware that those in work and receiving housing benefit who work an extra three hours a week will lose 85% of that extra income to pay for their rent and council tax. Therefore they would still have to pay the bedroom tax.

I am the MP for Manchester Central and my constituency has the highest number of people affected by the bedroom tax in the country—over 4,000. That is not just a number; it is people struggling desperately as a result of this unjust policy.

I have three main criticisms of this policy, and they build on the points made by my right hon. Friend the Member for Greenwich and Woolwich: it is a morally wrong and corrupt policy; it costs more than it saves; and it does not even work. By any measure, that is a pretty damning indictment of a policy.

It is morally wrong because it is such a blunt instrument and it is punishing all sorts of vulnerable people who have done nothing wrong. We have heard many examples from colleagues, charting the human cost of this disastrous policy. I want to highlight one other.

Elizabeth has a very disabled son, Ryan. Their case has been highlighted by the Manchester Evening News and the Daily Mirror, both of which have been running excellent campaigns against the bedroom tax. Ryan is a disabled adult and requires around-the-clock care, including overnight care. He is not excluded from the bedroom tax policy, however, because he is not the tenant of the property. Therefore, they are subject to the bedroom tax. After many weeks and months of anxious worrying, Elizabeth finally, after my intervention, was awarded the discretionary housing money. However, this does not take away from the fact that she is not sure what is going to happen next year or the year after that. That is the kind of anxiety people are facing. On the discretionary housing payment, I am delighted that the Minister has today said that if more claimants qualify but the £1.9 million that Manchester city council has received is not enough, the Government will guarantee those payments.

This policy also costs more than it saves, as is highlighted by the case of my constituent, Alan. He is in his late-50s and he has worked for most of his life. He lives in a two-bedroom property because no one-bedroom properties were available for him. He was made redundant and is now on benefits of £71.70 a fortnight. His social housing costs £60 a week and he has been asked to pay the bedroom tax out of that money. If he wants to move to the private sector, which is the only real option for him, that will cost him at least £100 a week in rent, which the housing benefit bill will have to pay. So that is going to take costs up, not down.

The final point I wish to make is that this policy does not even work. Many Government Members have talked about how it deals with overcrowding and people on the housing waiting list. In Manchester, 19,000 people are on that list and that figure has not moved one jot since this policy was introduced, because all the slack of available property is being taken up by people doing housing swaps. The only properties becoming available are two-bedroom properties in blocks of flats, which are unsuitable for families with children. So those properties are going to people in band 5—people who are not most in need. Those who are most in need are being pushed further and further down the waiting list.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend is making a strong speech, in which she mentioned families with children. Did she share my shock at Lord Freud’s comment that families who are separated should get a sofa bed to deal with the problem of being hit by the bedroom tax? Was that not a shocking thing to say about the situation of families in this country?

[Lucy Powell]

It was a shocking thing to say. It showed a complete failure to understand what family life is like and to understand that many fathers—I thought the Conservatives claimed to be the party of the fathers—have contact with their children only if they have a spare bedroom for them to stay in, so they will be losing that contact. That is a disgraceful aspect of this policy.

Perhaps if the Government had done a little more research, analysis and modelling before introducing this proposal, they might have foreseen some of these knock-on consequences. Labour Members are all for looking at how we can deal with some of the issues relating to under-occupancy and housing shortage, but this sort of brutal, blunt instrument does nothing to address that—in fact, it does quite the opposite. We need a long-term strategy bringing together the housing associations, other policy makers and tenants to work out how we can best use a carrot and stick approach to deal with under-occupancy. What we have from this Government is a morally corrupt policy that does not work and is going to cost the taxpayer even more.

--- Later in debate ---

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is a pleasure to follow the passionate speech of my hon. Friend the Member for Wansbeck (Ian Lavery), who took on some of the outrageous and absolutely extraordinary comments that we have heard.

As we have heard today, the policy is iniquitous, unfair and economically illiterate. We have heard fantasy claims about the savings that will be made and the transfer of liability—the financial consequences for councils and registered social landlords. We have also heard some quite extraordinary boasts from the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb). He talked about the wonderful rise in discretionary housing payments. Such claims are like telling someone that both their arms will be broken, but they will be given a sling for one of them. The policy is not working, but they will have some crumbs off the table to sort it out afterwards. That is extraordinary, and it reflects the local story of pressure and pain that I have seen with the rise in food banks. The Trussell Trust says that 45% of that increase is due to policies such as the bedroom tax and the cost pressures that come with energy bills, leading people into the embrace of loan sharks.

There is also the mental strain. We have heard some tragic tales today, in particular from my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) about suicide. I similarly have had constituents come to me. One in particular handed me a letter that he could not bear to read to me, which literally said, “I would rather kill myself, then there would be one less mouth to feed.” Those are the real stories and Ministers would do well to listen to them.

One family in Llanrumney in my constituency lives in a four-bedroom council home with two severely autistic sons. They moved in 15 years ago and had important adaptations made on medical grounds. Their daughter then moved out, and they are now considered to have a spare room and have been hit by the bedroom tax. The council is doing everything that it can to help, but there will be a massive cost in moving to another house and adapting that, let alone the additional strain put on two autistic children. Changing their lives will mean significant damage to them. The suggestion of some Government Members that such circumstances are lifestyle choices is frankly offensive.

Ministers would do well to listen to some of the financial facts. I have spoken to both my local authorities this week. Cardiff has told me that it is now dealing with more than £1 million-worth of arrears. That is up £360,000 since the same period last year, largely due to the bedroom tax. It has five times more tenants looking to move to one-bedroom properties than exist in the city, and in the Vale of Glamorgan, my neighbouring authority, there are more than 16 times more people looking for one-bedroom properties than exist. Again, 41% of their accounts are seeing increasing arrears.

It was a shame today to hear the hon. Member for Monmouth (David T. C. Davies) refer to feckless fathers and putting them in chains and other things, because he and I have had some sensible and reasonable discussions on these issues, most notably in preparing a report that was agreed by the Welsh Affairs Committee. I urge Ministers to look at that because it shows the disproportionate impact of this policy on people in Wales, where it has hit 40,000 people, more than anywhere else in Britain, 25,000 of whom are disabled.

We also heard some real gems in that inquiry, most notably Lord Freud’s suggestion that people should buy sofa beds or go out and get some work. He did not recognise that most of those people are in work and claiming housing benefit because they are on such low incomes. Also, extraordinarily, given the stories about suicide and mental health issues that we have heard today, neither he nor the Department had even considered the mental health impacts.

It is therefore really galling to have a Liberal Democrat candidate wandering around my area of Cardiff, where many hundreds of people are affected by the bedroom tax, and sticking leaflets through the doors stating that the Lib Dems are on the side of a fairer society. I am sorry, but I find that absolutely extraordinary. I hope that the voters of Cardiff South and Penarth show them exactly what we think of them in a few weeks’ time.

Disabled People

Stephen Doughty Excerpts

Wednesday 10th July 2013 Commons Chamber

[Mr Byrne]

The Secretary of State has just refused to deny that this iniquitous policy is going to cost £100 million more than it saves. If he wants to refute that, why is he refusing to give our noble Friends in the other place the detailed model his Department used in order to assess this and come to the conclusion it was going to save £490 million? If he wants to have an argument about whether this does indeed cost more than it saves, he should provide that detailed analysis and those figures.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My right hon. Friend is making a crucial point about the cost of the bedroom tax, and I can provide him with some figures from Cardiff council. Since 1 April there are now 1,176 people in arrears and the council estimates that 900 of them have never been in arrears before. That is going to cost it £175,000 in additional costs, and its arrears bill has risen to £1.2 million, so the idea that this is going to save money is complete fantasy.

[Mr Byrne]

What is interesting about the Secretary of State’s response is that he cannot defend his Department’s failure, and he cannot defend his own failure of leadership in not giving us a cumulative impact assessment of these cuts because he fears what that will show. He fears it will show that this bedroom tax will cost more than it saves—and it is just one of a number of changes now coming together to hit disabled people, and hit them hard.

--- Later in debate ---

[Mr Byrne]

Of course not. We are saying that the idea of introducing holistic care, in the way the hon. Gentleman’s Department of Health colleague implies in the Care Bill, is something the Secretary of State could learn from.

[Stephen Doughty]

When Lord Freud gave evidence to the Select Committee on Welsh Affairs and was questioned about the mental health impacts on people going through the reforms and the impact they were having on individual lives, he appeared to suggest that few conversations had been had with organisations such as the Samaritans and Mind. That is deeply concerning; does my right hon. Friend agree? A constituent came to me the other week and handed me a letter that said at the end, “I’d rather kill myself and then they will have one less mouth to feed.” That is the daily experience of the people who come to our surgeries.

[Mr Byrne]

That is the tragedy about which we are all hearing in our constituencies. I am sure that the Minister has heard the same thing from his constituents, because we know that some 890 people could lose their disability living allowance in his constituency. If people are in work and lose their DLA, they will lose some of their advantages in the tax credit system. If they are also hit by the uprating legislation and the bedroom tax and also lose their transitional support under universal credit, it will not be long before they are £5,000 a year worse off. How can we in this country, one of the richest nations on earth, justify giving a huge tax cut to millionaires and then saying to 890 people in the Minister’s constituency that if they want to go to work they might be £5,000 a year worse off? How on earth can the Minister justify that to the House?

The Government are putting some our most vulnerable people in the middle of a labyrinth and, frankly, if we are to succeed as a nation in the future we cannot go on like this. We must draw on every ounce of talent that is available to us in these islands. That is the only way we will become a nation that is firing on all cylinders. Today, we offer the Secretary of State no more than a humble step on the road—something that will help him in his negotiations with the Chancellor before the autumn statement. I hope that it is something he will be able to support. No one will be able to understand why he has set his face against it if he votes against it and leads his troops to vote against it this afternoon. I hope he accepts it and, if he does not, I hope this House will force him to.

Budget Resolutions and Economic Situation

Stephen Doughty Excerpts

Friday 22nd March 2013 Commons Chamber

[Mr Byrne]

We have unemployment rising and debt that is £245 billion higher than forecast. The hon. Gentleman should be ashamed of that record.

We needed a Budget to get unemployment down and we did not get one. I hoped to see a Budget that delivered for those who are out of work, but what did we get instead? The conclusion of the OBR was clear that the impact of the Budget on growth would be so significant that it would amount to precisely zero. That is what the Secretary of State has managed to negotiate from the Chancellor. He has been turned over, stitched up and done like a kipper yet again.

Any sensible Secretary of State, faced with a collapsing Work programme and rising unemployment, would surely ask for more help today, not tomorrow. People out of work need help today, not in the years to come. What did we see instead? The OBR has weighed up the efforts of the Secretary of State and the Chancellor and it has concluded that what is in hand is going so well that unemployment will not go down next year, but up—and that is against the projections set out in the 2010 Budget. Next year the International Labour Organisation measure of unemployment is expected to rise from 7.9% to 8%, and the claimant count is set to rise by another 50,000. What is even worse is that the OBR says that the welfare bill will not go down either—it will go up, including for housing benefit. Spending on social security benefits will now be £21 billion higher than the Chancellor first planned.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My right hon. Friend is making a strong point. There is no more striking indictment than the fact that in my constituency the number of those claiming for more than 12 months has risen against the previous year by 22.6%. That long-term unemployment—the loss of hope, talent and potential—is a striking indictment of the Government.

--- Later in debate ---

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is a pleasure to follow the excellent speeches by my hon. Friends the Members for Lewisham East (Heidi Alexander), for Walthamstow (Stella Creasy), and for Stoke-on-Trent Central (Tristram Hunt).

This is truly a triple D-rated Budget that leaves us in more debt than ever before, at risk of a triple dip, and with our credit rating downgraded. It is a Budget once again characterised by unfairness, incompetence and political game playing instead of the national interest. It is unfair, because millions of people face declining living standards while millionaires get a tax cut; it is incompetent, because the Chancellor and the Secretary of State for Business, Innovation and Skills cannot even clarify the details of the spare homes subsidy; and political game playing has seen the Chancellor play fast and loose with departmental spending to even greater political exposure in the short term, regardless of the consequences for front-line services, our international commitments or, indeed, the growth of our economy.

It is not just Opposition Members who say that—it is the Office for Budget Responsibility, which has confirmed that by 2015, people will be worse off than they were in 2010, with real wages set to fall by 2.4% over this Parliament; it is the Institute for Fiscal Studies, which only yesterday accused the Chancellor of “wasting the time” of Whitehall officials and creating “real economic costs” for the country; and, indeed, the Home Secretary, who hit the nail on the head only a couple of weeks ago, when she said:

“It’s not enough to cut budgets and hope for the best.”

I shall focus on page 70 of the Red Book, which details those £7.6 billion-worth of revenue underspends, and £2.1 billion of capital underspends in Government Departments—a staggering £9.8 billion in total. All of that was apparently done so that the Chancellor could present the illusion of a tiny drop in public sector net borrowing and make up for other accounting errors such as the 4G auction, which raised £1 billion less than he promised in the autumn statement. The consequences are serious. Opposition Members have rightly demanded to know which services, which spending, which projects and which promises have been delayed or cancelled by Departments ranging from the Department of Health to the Home Office. We need answers, and we need them now.

To take a Department in which I was proud to work, in 2010, the Prime Minister and the Chancellor categorically promised us that they would

“not balance the budget on the back of the world’s poor”.

It appears, however, that that is precisely what they have done this year, with the Department for International Development underspending by a staggering £0.5 billion, which amounts to 8% of its total revenue budget settlement for this year. That might represent a failure to pay our dues to the UN, or make our contribution to the World Bank. Indeed, the Chief Secretary seemed to suggest in TV interviews that some of the world’s poorest countries might not be ready to receive our funding. I very much hope that that proves to be untrue, because I am pretty sure that children who need vital vaccines, education or food are ready to receive our help.

[Michael Ellis (Northampton North) (Con)]

Is it not rather churlish of the hon. Gentleman to make such references, as the Government have been considerably more generous than the Labour Government were in 13 years in office in affirming a 0.7% rate of gross domestic product for international development, which is more generous than almost any other country, yet the hon. Gentleman stands up and—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am sure that the hon. Gentleman is hoping to speak later. He must save something to tell the House.

[Stephen Doughty]

The hon. Gentleman has clearly not looked at the record, because in fact we tripled the aid budget, made a commitment to the 0.7% target and, indeed, made a commitment to a law on 0.7%, which this Government have done, too, but have not put into practice.

The Government will get full credit from me if they meet the 0.7% aid target, but given the revelations on the underspend and the fantasy figures elsewhere in the Budget, why should we accept their assurances? There is another serious consequence of the underspend. We already know the stark facts that the OBR has halved its growth forecast for this year, and downgraded its forecast for next year. Since the comprehensive spending review in 2010, the UK economy has grown by just 0.7%, compared with 5.3% predicted at the time. The economy shrank 0.3% in the last quarter, and we now face the stark prospect—although I seriously hope not— of a triple-dip recession, which is why this forced underspending is deeply irresponsible, as by itself it could further hasten a slip into a triple dip, particularly in the absence of serious measures in the Budget to promote growth.

It is our constituents who will face the consequences, the unfairness and the hardship over the coming months, such as the nearly one in 10 young people locally in Cardiff South and Penarth who now have to claim jobseeker’s allowance and to do so, as I mentioned earlier, for longer. The number of those claiming for 12 months or more is up by 22.6%. Each month of that is another month of frustration, anger, hardship, wasted talent and wasted value. Others affected are the constituents whom I met in the east of Cardiff, who have lost their jobs in the construction industry because of this Government’s failure to deliver infrastructure or housing, the disabled couple in Grangetown who fear the bedroom tax, while they see millionaires offered a spare home subsidy and a tax cut worth £100,000, and the hundreds of people fighting for every job vacancy—other hon. Members have described the situation—such as those fighting for a job vacancy in Penarth and in other local businesses.

There could not be a starker representation of the Chancellor’s and the Prime Minister’s Britain than the staggering rise of food banks, which have seen an eye-watering 198% increase in use in Wales in just the past year. No wonder the Prime Minister wants to keep the cameras away on his visit. The reasons for people in Wales having to use food banks say it all: 43% of people going to a food bank say they are doing it because of benefit delays or changes, 25% are doing it because they are on low income, and 10% are doing it because they are in debt. So we see debt rising at the top and debt rising at the bottom. That is life in Tory and Lib Dem Britain.

This Government could have driven forward decisions on infrastructure instead of leaving only seven out of 576 projects completed. They could have used the funds from the 4G auction to pay for new housing. They could have delivered a VAT cut that would have done far more for hard-pressed consumers than small duty cuts, however welcome. They could have invested in jobs and training for our young people, as the Labour Welsh Government have done with Jobs Growth Wales and investment in new apprentices.

As we look outside at the snow today—which, I regret, may mean that I am unable to stay for the closing speeches—and we wonder where the spring is, many of my constituents will be asking the same question on hearing this Budget: when are the sun and the warmth coming back to the economy, faced as they are with the cold wind of this no-change Budget and this no-change Chancellor?

Housing Benefit (Under-occupancy Penalty)

Stephen Doughty Excerpts

Wednesday 27th February 2013 Commons Chamber

[Mr Byrne]

House building did not collapse. In the final years of our Government we brought forward serious new investment for housing, and it is the Labour party that is proposing serious investment in social housing and new housing today. That position seems to be shared by the Deputy Prime Minister, but his Government are presiding over an 11% collapse in the number of houses being built.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

Does my right hon. Friend agree that it is extraordinarily hypocritical for the Secretary of State to be talking about investing in housing when—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am sure that the hon. Gentleman did not mean to use the word “hypocritical” and that he is now going to withdraw it and carry on with his question.

[Stephen Doughty]

I will withdraw it, and I apologise, Mr Deputy Speaker. It is extraordinary for the Secretary of State to be talking about this measure when he is putting many of our housing associations and registered social landlords at risk. Moody’s downgraded housing associations’ credit ratings this week, which means that they are not going to be able to invest either in the properties they have or in building new ones, as my hon. Friend the Member for Swansea West (Geraint Davies) just said.

[Mr Byrne]

My hon. Friend is right. We have the National Housing Federation to thank for estimates on the amount of arrears, which housing associations now say are going to grow. Some estimates I have seen show that housing associations face up to a quarter of a billion pounds-worth of arrears because of this policy and other changes the Secretary of State is making. At a time when the country’s debt rating has been downgraded, that will make things incredibly difficult for housing associations in delivering on future social housing builds. The bedroom tax will only make the situation worse.

Universal Credit (Wales)

Stephen Doughty Excerpts

Tuesday 5th February 2013 Westminster Hall

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Sheridan. It is delightful to see that so many colleagues from across Wales have joined me here, and some of them will undoubtedly wish to intervene during my speech.

We have been repeatedly told by Ministers that universal credit would ensure that work pays, improve incentives to work, simplify the benefits system and be easy to introduce. I am afraid to say that the widespread consensus is now that it might be fine in theory, but that it will seriously backfire in practice, with serious consequences for some of my most vulnerable constituents and those of my hon. Friends throughout Wales. I applied for this debate to draw attention to my sincere worries about the potential impacts on people across Wales of what one colleague has described as a car crash waiting to happen.

[Mrs Madeleine Moon (Bridgend) (Lab)]

Is not part of the problem the whole climate of uncertainty and insecurity in which benefit claimants are living? In particular, the bedroom tax means that carers cannot have a bedroom available for night sitters, people on home dialysis cannot have a room for that purpose and, more worryingly, parents without custody of their children during the week cannot keep a room so that they can have custody of them at weekends. Should the Government not have sorted that out before introducing yet more changes?

[Jim Sheridan (in the Chair)]

Order. In anticipation of the number of interventions that may be coming, it would be acceptable if they were brief.

[Stephen Doughty]

I agree with my hon. Friend the Member for Bridgend (Mrs Moon). I will come to the issue of uncertainty, but that point has certainly been reflected to me by many constituents and organisations that work with those affected by the changes. I have spent much time speaking to constituents. One of the benefits of standing in a by-election is spending an awful lot of time speaking to people, and the issue regularly came up on the doorstep. I have spoken to housing associations and other registered social landlords, to local authorities—specifically Cardiff council—and to other experts. Although there are a variety of views about whether the simplification of welfare payments is desirable, there are clearly consistent fears and forecasts of dire consequences that Ministers and the Department for Work and Pensions have not adequately answered or addressed. Perhaps the Minister will do so today.

[Hywel Williams (Arfon) (PC)]

To be brief, it seems to me that the Government have simply not considered the inflexibility in the housing market, or if they have considered that, they do not seem to care. Is that the hon. Gentleman’s view, too?

[Stephen Doughty]

Indeed. I agree with the hon. Gentleman’s comments.

Coming on top of two of what my right hon. Friend the Member for South Shields (David Miliband) has called “rancid” measures—the bedroom tax, and the tax on people in work in the Welfare Benefits Up-rating Bill that we saw a few weeks ago—I am deeply fearful about the impact of the changes on many of our most vulnerable constituents, not to mention the organisations that support them.

Let us look at some of the headline figures. On Monday 10 December 2012, the Government published their new impact assessment for universal credit, which showed several very worrying facts. First, 800,000 more people across the UK face lower entitlements. The original assessment, which was published in 2011, said that 2 million people would face lower entitlements under universal credit, but that number has now risen to 2.8 million, with an average loss of entitlement of £137 a month. I will come to the specific statistics for Wales in a moment. Of those losers, 400,000 will be concentrated in the two lowest income groups.

We expect 600,000 more parents to lose out under universal credit. Households will also lose more: the original impact assessment said that only 200,000 families would lose more than £75 a month, but the latest one states that 1.3 million households will lose more than £100 a month and that an incredible 300,000 families will lose more than £300 a month, which amounts to £3,600 a year. The impact assessment points out that higher administrative costs will result from the changes. The Department has also dropped its claim that universal credit will tackle poverty, which has been removed from the 2012 impact assessment.

There have been delays, and we might hear the reasons for some of them when the Minister speaks later. The roll-out of universal credit is already a significant number of months late, and the DWP has been unable to confirm the timetable. Indeed, there is a great lack of clarity on the part of my local authority and others about how universal credit will be rolled out and when.

[Jessica Morden (Newport East) (Lab)]

Does my hon. Friend agree that the Government have still not given any real answers about how those without bank accounts or internet access will be helped to adapt to the new monthly payments? Such answers are long overdue.

[Stephen Doughty]

Absolutely, and I will come on to that point in due course.

It is not only those whom I have spoken to who have sincere worries about universal credit. As we have several times seen in the press, one Cabinet Minister has reportedly said in private:

“The information technology for the new system is nowhere near ready. It’s a disaster waiting to happen.”

Who knows whether such rumours are to be believed, but I understand that a number of Cabinet Ministers share that view, which is perhaps one reason for the delays.

What is the specific impact on Wales? Based on an analysis of the December impact assessment and some rough calculations, we estimate that a staggering 140,000 people across Wales might lose £1,600 a year. That is based on an estimate of the Welsh population that will be affected. I would be grateful if the Minister shared the Government’s figures and estimates about how many will be affected in Wales and how much they will lose. Will he provide a breakdown by local authority to help local authorities prepare for the impact of the changes?

Aside from the raw figures, which are shocking in themselves, I want to share the key fears that people have raised with me about the implementation of universal credit in Wales. First, there is the challenge of budgeting for many families; secondly, as my hon. Friend the Member for Newport East (Jessica Morden) mentioned, there is the digital divide; thirdly, there are power relationships within the home; and, finally, there are the risks posed to local authorities, housing associations and other registered social landlords.

First, on budgeting, the Secretary of State for Work and Pensions frequently appears to suggest that those of us who raise the issue are patronising our constituents. Rather than taking so entirely complacent an approach, I commend the work that organisations such as the citizens advice bureaux, the Cardiff and Vale credit union, housing associations—for example, Cadwyn in my constituency—are doing to support tenants by helping them to set up bank accounts, jam jar accounts and similar facilities in credit unions. I also commend the Welsh Government’s work to support those efforts.

Levels of financial literacy––let alone access to a bank account––are not, unlike this measure, universal, and we need to be realistic about the impact of the changes on many people. Rather than making huge assumptions, perhaps the Minister would tell us what risks he sees in relation to the problems in the area and what his Department is doing to assist. I can certainly tell him that many of the organisations that I have mentioned, let alone individual constituents, have experienced varying or little support from his Department, and that relates only to those who are aware of such support.

I want to touch on direct payments and the data from the direct payment pilots that the Department has conducted. A couple of days ago, “Inside Housing” published an article entitled, “Direct payment pilots report increased arrears”, by the journalist Carl Brown, which states:

“Landlords testing direct payment of benefit failed to collect 8 per cent of rent on average in the first four months of the six pilot projects.”

[Nia Griffith (Llanelli) (Lab)]

Will my hon. Friend also ask the Minister what assessment has been made of the effect on local councils of all those arrears, because they will have major cash-flow problems?

[Stephen Doughty]

Indeed, I absolutely agree with my hon. Friend’s point, which I will move on to later.

Mr Brown also stated:

“Data released today by the Department for Work and Pensions showed 6,220 tenants across the UK were paid directly in the first four months of the projects. Of these, 92 per cent of rent was collected on average overall, meaning arrears were around double the normal figure. A total of 316 tenants have been switched back to payment of benefit to the landlord.”

To give a figure that is specific to Wales, in relation to Bron Afon Community Housing and Charter Housing in Torfaen, 535 tenants were involved in the first payments and there have been 59 switchbacks so far, which is about 11%. Those figures are obviously of deep concern and they raise wider issues: there are deep worries about how universal credit will work in practice and about the support provided to people, and there are also major implications for organisations, whether they are local authorities or housing associations, that are supporting those tenants.

Secondly, on the digital divide, my colleague the Welsh Minister for Finance, Jane Hutt, has repeatedly warned that people with few or no IT skills might have difficulty applying for universal credit. In 2010, figures suggested that about a third of adults in Wales did not use the internet regularly, and recent figures from the Office for National Statistics suggest that about 20% have never used it.

[Wayne David (Caerphilly) (Lab)]

Speaking as the former deputy Minister for digital inclusion, may I say that my hon. Friend makes a strong point? In my borough of Caerphilly, some 37% of the population are excluded digitally. The borough is making provisions to ensure that those people have access to computers, but many local authorities have had, for example, cuts in library services and excluded people will have no access to computers whatsoever.

[Stephen Doughty]

My hon. Friend also makes a strong point. What assessment has the Minister made of the problem? I quote to him evidence submitted by Community Housing Cymru to the Work and Pensions Committee last year, which said:

“The presumption of a predominantly online self-service process is concerning since it is our experience is that a large percentage of people lack not only the knowledge and accessibility to make on-line claims but also the confidence…We know that a large percentage of social housing tenants do not have access to the internet at home, for example, in 2010 Tai Calon, a housing association based in Blaenau Gwent found that 42% of their tenants have access to the internet.”

That is shockingly low. The evidence continues:

“Blaenau Gwent remains the most digitally excluded area in Wales”

which I know from conversations with my hon. Friend the Member for Blaenau Gwent (Nick Smith). Finally, the evidence states that there is

“a lack of clarity in Wales as to where independent advice can be sought on Universal Credit. Citizens Advice Bureaux are already inundated and welfare benefit enquiries have now overtaken debt enquiries in number.”

The concerns are serious.

Thirdly, in the spirit of openness, I announced on Twitter that I would be holding this debate and asked constituents to come forward with concerns. One such concern, which was shared by many others, is that there will be particular risks for women as relationships in the home may be affected by changes to payments and to who will have control of the money, especially given that child benefit was always paid to the mother in the past and provided some security. Will the Minister reassure my constituents and others who have raised such concerns?

Finally, I turn to the real concerns of organisations working with vulnerable clients, particularly those in the housing sector in Wales. Last week, I met representatives of Cadwyn, a housing association with significant numbers of homes and tenants in the Grangetown and Butetown areas of my constituency, and they are deeply worried about what they see as a perfect storm with the coming together of the bedroom tax, the benefit cap—by which only London is affected more than Cardiff—and universal credit. They showed me some extremely worrying figures about rent payment, the risk of arrears, high-risk customers and the challenges that the proposal will create for them and other registered social landlords across Wales. What forecasts has the Department for Work and Pensions made of the financial challenges that registered social landlords may face as a result of increasing rent arrears?

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

The hon. Gentleman has made some strong and valid points. I know that what I am about to refer to took place before his time in this place, but does he agree that it was a serious political miscalculation of the Labour party to abstain on Second Reading of the Welfare Reform Act 2012 that led to the changes being implemented?

[Stephen Doughty]

As the hon. Gentleman says, it was before my time in this place, so I will refrain from commenting and make some progress.

I am happy to report that Cadwyn is taking proactive measures to help its tenants adapt to the swathe of changes, including help with jam jar accounts, visits in person to vulnerable tenants and organising property swapping mechanisms on Facebook. Those are the types of methods to which it is resorting. There is, however, a limit to what it can do to mitigate the impact of all the changes coming together, particularly with the hard core of tenants who will prove difficult to access, reach and support and who will find it difficult fundamentally to adapt to universal credit and other changes. On the bedroom tax, there are simply not the properties to move into.

If that is not enough, let us take the perspective of Cardiff, the largest local authority in Wales. I know that its concerns are shared by many neighbouring local authorities, including Vale of Glamorgan, which is also in my constituency. Last week, I spoke to officials at Cardiff council last week who said:

“With regard to Universal Credit, this is expected to start in Cardiff from February 2014 but there is still considerable uncertainty about when this will be fully implemented. This will affect 140 jobs in Cardiff.”

They face concerns such as a

“lack of clarity about how face to face services will be delivered. Cardiff currently sees 1000 customers a week about housing benefit face to face. The insistence on digital by default fails to recognise how many low income households cannot afford broadband and how much help is needed by vulnerable tenants to claim benefits. Payment direct to tenants in social housing…is likely to result in arrears, evictions and homelessness. Indications from the pilots are that tenants are falling into arrears.”

I have already mentioned that evidence. The concerns continue:

“There is still no clarity about the circumstances in which payments will be made to the landlord.”

[Chris Evans (Islwyn) (Lab/Co-op)]

Like me, my hon. Friend is a supporter of the Co-op’s campaign against legal loan sharks. Does he agree that, in the case of his and my constituencies, legal loan sharks are positively rubbing their hands and waiting for residents to come to them?

[Stephen Doughty]

I absolutely agree with my hon. Friend. I have seen an explosion in legal loan-shark activity on our streets, whether that be people knocking on doors or opening up offices on the high street. I commend the work of organisations such as the Cardiff and Vale credit union that are trying to provide alternative options.

Cardiff council was also concerned about the following:

“Budgeting issues are also a concern as Universal Credit will be paid monthly in arrears. This is one of the major concerns expressed by customers visiting our roadshows.”

It has been taking proactive steps. It was also concerned that:

“Low income families who depend on this money will have no resource at all if there are any problems with receipt of the payment.”

I do not want to guess the future, but a serious concern is that the record of all Governments in implementing large-scale IT projects leaves much to be desired.

Lynda Thorne, the cabinet member for housing at Cardiff council, wrote to me just yesterday and said:

“I am concerned that the end result of many of these changes will be an increase in homelessness and the transfer of extra financial burdens falling on local council tax payers in terms of picking up the cost of a reduction in the collection rate of council tax, the extra cost of providing help and support to those who need support completing claims and a rise in homelessness created from direct payments.”

She makes the point that Cardiff has

“more private Landlords providing accommodation to those on benefits than all the RSLs, housing Associations, put together. Private Landlords have indicated that they are likely to revert back to only letting to those in work resulting in even more families and individuals becoming homeless thus costing council tax payers more. We currently have more than 500 families and individuals in temporary accommodation at any one time.”

What are the Minister’s reflections on those legitimate concerns raised by a major housing association in my constituency and the largest local authority in Wales?

[Kevin Brennan (Cardiff West) (Lab)]

My hon. Friend is being generous. Would it not be ironic were the Government to bring about a situation in which, as he describes, private landlords cannot rent out their accommodation to those most in need, because it cannot be guaranteed that they will receive their rent? Is that not the sign of a policy that is ideological and not based on evidence and common sense?

[Stephen Doughty]

rose—

[Jim Sheridan (in the Chair)]

Order. I recognise that the hon. Gentleman is new to the Chamber, but we would like to leave some time for the Minister to respond.

[Stephen Doughty]

Thank you, Mr Sheridan. I will give the Minister some time to respond very shortly.

If the examples I gave before the intervention are not good enough, the Minister can look at the example of National Energy Action in Wales, which works extensively on fuel poverty. It recently stated:

“Sweeping changes to welfare reform including Universal Credit…will be hitting Welsh households hard in the coming months and will have major implications for the Welsh Government's plans to tackle poverty, including fuel poverty, in Wales.”

My friend, Huw Lewis, the Housing Minister in Wales, has said:

“We can't make any distinction here. I think it would be foolish if people were under the impression that it's just going to be something that affects people in social housing.”

There are huge concerns, which are shared by not only me or the people who have raised them with me on the street or in correspondence to my constituency office, but also the largest local authority in Wales, a number of housing associations, the bodies representing such people and a wide range of other experts. Wales will be hit disproportionately by the measures and by what could be an extremely chaotic set of reforms. I am seeing, frankly, poor evidence of support and engagement from DWP Ministers and others, and I fear that many unintended consequences will affect some of the most vulnerable people across Wales.

--- Later in debate ---

[Mr Hoban]

I have 12 minutes and many questions to answer in that time, and I want to correct some of the misapprehensions and misunderstandings that have been raised in the debate.

Universal credit is a cornerstone of the Government’s welfare reform programme, and it will simplify the benefit system and tackle welfare dependency by making work pay. Our aim is to offer seamless support for people making the transition into work. No longer will people find themselves in the absurd position where their benefit is disrupted the moment that they start work. Our reforms will ensure that people are better off in work than they are on benefits.

In Wales, we estimate that once universal credit is fully up and running some 200,000 households will be eligible for higher payments under it, typically seeing an increase of almost £160 per month, and we also estimate that the proportion of people in Wales who would stand to lose more than 70% of their increased earnings by moving into work for 10 hours a week will reduce under universal credit from 32%—as it is under the system we have inherited from the previous Government —to 3%. That is why delivering this reform is important for the people of Wales. It will make people better off in work, it will make work pay and it will reduce the risks involved in taking up work or doing more work.

Let me deal with some of the specific concerns that have been expressed. The hon. Member for Cardiff South and Penarth raised the issue about benefits being paid in arrears on a monthly basis. It is important that the new system is designed around the patterns of modern working life. Given that three quarters of the employed population are already paid on a monthly basis, receiving payments monthly will be something that people are familiar with when we move to universal credit.

Of course we recognise that some people may struggle to budget, and we are making provision to ensure that they do not fall through the cracks. We are working with banks and credit unions, such as the ones the hon. Gentleman quoted, to explore suitable financial products that may help people to budget and to put money by each month to fulfil their responsibilities to pay their rent and other household bills. Around 4.2 million Department for Work and Pensions claimants already have a bank account. We know that historically some people on a low income have experienced difficulties in accessing and using banking products. We want to ensure that claimants have access to a basic bank account with safe and secure standing order and direct debit facilities.

Let me move on to the point that was made about online services. As the hon. Gentleman indicated, the service will be online. We want people to be able to make a claim and to report changes, as they would with online banking. If people are going to participate effectively in today’s modern labour market, they will have to be conversant with digital tools. In the words of Lord Freud, digitisation is a “social imperative”. Of course we can and must do more to ensure that people can access services online. We do not want the digital divide in his constituency and others to persist. We must tackle it and this process is a very good way of tackling it. I am surprised that Opposition Members are so resistant to the actions that we can take to help tackle that digital divide and improve social inclusion.

We are already looking at some of the local authority pilots that have been carried out. Two of them are in Wales, with one in Caerphilly and one in Newport. The pilots are helping us to understand what support we need to give to help people to move into universal credit. We will use the pilots to learn the lessons, and we will apply them as we develop future stages of delivering universal credit, because we have ambitious targets for digital take-up of our services.

[Stephen Doughty]

Will the Minister give way?

[Mr Hoban]

No, I will not give way. The hon. Gentleman had more than his fair share of time, so let me try to deal with more of the questions that he put.

The hon. Gentleman talked about this project being behind schedule. I have no idea where he got that idea from. The programme is not behind schedule; it is actually on time. I counsel him, and he will learn this more as he is in this House, never to believe what he reads in the paper. The programme is on time and on schedule. The first stage will start at the end of April in the pathfinder area in Greater Manchester and the north-west, and the programme will continue to roll out nationally.

The hon. Gentleman rightly made a point about the failure of previous Governments to deliver big IT projects on time. We saw that under the previous Government. I think that all of us in this House who have had to work with the complexity of tax credits on behalf of our constituents will recognise the failure of that system and the problems that it created for our constituents.

The way that we are working through the implementation of this programme is through our pathfinder approach, which enables us to proceed with implementation in phases. It is an approach that we have used in other large programmes. For example, in the new child maintenance scheme we have used the pathfinder process. In implementing the personal independence payment, which replaces the disability living allowance, we will begin with a few thousand new claims in April, before rolling it out. So the staged and methodical approach that we take to rolling out programmes—“prove before you move”—means that we will fully implement a change once we are satisfied from experience in a live environment that it is safe to do so.

That is why we are rolling out the pathfinder in April in Greater Manchester and Cheshire, to allow us time to test during this period and with a view to successful implementation nationally later this year. This thoughtful and considered approach to rolling out is important. It will ensure that we test the operation to run universal credit; the people capabilities required to support the service; communications; implementation; the behaviour of claimants; and how to ensure that we respond effectively to unintended consequences.

Let me touch on direct payments. I understand the concerns about the payment of housing costs directly to claimants, but we remain of the view that paying housing costs directly is an important way of helping people to manage their own finances and to become more independent. The emerging evidence from the demonstration projects, including the one in Torfaen, does not suggest that large numbers of claimants will suddenly fall into arrears. On the contrary, because the take-on of claims is going to be gradual—over a period of years—there will be no big bang effect, and there is no real evidence of any likely sudden impact on landlords’ incomes.

There will be lessons to learn from those projects, and we will continue to monitor the position very carefully. They will enable us to test trigger points at different levels of arrears, so that if a tenant does fall behind with their rent, action can be taken, including—if necessary—switching back payment to the landlord for a period and offering additional support to the tenant.

We should treat people receiving universal credit as adults. We should encourage them to stand on their own two feet and to manage their money as others manage their money, particularly as they will have to do so as they move into a situation where they increase their earnings. Nevertheless, the support mechanisms that are in place are very important. They give landlords a real incentive to work with their tenants around employment issues to help them into work, and encourage landlords to work more closely with their tenants to understand their financial capabilities and what support might be needed. We should not infantilise universal credit recipients in the way that Opposition Members seem to be suggesting.

There has also been discussion about local support services. We are working in partnership with local authority associations, including the Welsh Local Government Association, on a local support services framework. That will ensure that effective local partnerships are put in place to help claimants with getting online and to learn how to manage their household budgets. As I said earlier, we will learn a great deal from the pathfinder phase of universal credit.

To ensure that we have taken into account the concerns of authorities in Wales, Wales is also represented in the development of the universal credit across a number of forums, pilots and projects, including a senior stakeholder group, a local authority transitional working group, a local authority finance and commercial group, a local support services taskforce, a direct payment demonstration project and local authority-led pilots.

Let me say just a little more about the pilots. We are currently running 12 local authority-led pilots and we aim to conclude those by the end of September. The aim of the pilots is to test and inform the development of a face-to-face delivery model. The pilots will provide important practical lessons on delivering services in an innovative way at the local level, including triage, which is working with claimants to identify their needs, how those needs can be met and where support can be accessed locally; improving online access, so that we can get more claimants using online resources and, where they cannot use them, providing assisted support to get online locally at libraries, community centres and other community buildings where personal computers may be accessible; budgeting support, so that people can manage their finances independently; and, of course, all underpinned with a work focus, to help claimants to find work and stay in work through a range of training and support networks. We have been working very closely with local authorities on a framework for delivering local support to those who need it, and we will announce further details of this very shortly.

We recognise the valid point that the hon. Gentleman made about ensuring that support is available at a local level. It is in none of our interests for claimants of universal credit to be left high and dry. That is why we are working to ensure that the support is in place, whether it is about getting online, debt advice, managing money, or setting up the right bank account or jam jar account to enable people to manage their money. We want to provide the infrastructure around universal credit to help claimants.

By doing it that way, and focusing on how we tackle those problems rather than simply throwing our hands up in horror and saying that it is all doomed to fail, we will provide the right outcomes for the hon. Gentleman’s constituents and for mine. That is because it is absolutely right that we do all we can to ensure that people know that work pays, that people in Wales will be better off as a consequence of the introduction of universal credit and that people do not see the disruption that happens at the moment when they move from out-of-work benefits to in-work benefits. The system is here to ensure that people understand that it is better to work than not to work, and better to earn more than to earn less. There will not be the situation that many people are in now, of having to turn down bonuses from their employers because it does not work with the benefit system. We need to tackle some of the problems of the past, to give our people hope for the future.

Oral Answers to Questions

Stephen Doughty Excerpts

Monday 28th January 2013 Commons Chamber

[Mr Duncan Smith]

All such programmes under Governments of any hue have always carried risk, because they are about change. The DWP benefits systems, including tax credits, are very complicated and often contradictory. Of course what we are doing involves risk, but we are trying to manage that risk. The best way to do so is to ensure that we introduce it stage by stage, so that we can recognise where we need to learn lessons, correct what is difficult or going wrong and ensure that we roll out the system properly.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

On Friday, I visited a housing association in my constituency that is greatly concerned about the introduction of universal credit, as well as the bedroom tax and the benefits cap. What assessment has the Secretary of State made of the impact on the finances of housing associations from the possible increases in rent arrears as a result of his Government’s policies?

[Mr Duncan Smith]

I do not believe that there will be an impact. [Interruption.] The Opposition should look to their own record and the housing benefit mess that they left us. They left a rising bill that had doubled in nearly 10 years, so it would be better to have a little less from them. We are trying to ensure that those who are paying this money are not allowed to slip into debt for any great length of time. That matter is being discussed with housing associations and we are making good progress on it. I believe that this approach will help people who are trying to get back into work enormously, rather than their being treated as though they are children who have to have all their bills paid for them.

Welfare Benefits Up-rating Bill

Stephen Doughty Excerpts

Tuesday 8th January 2013 Commons Chamber

[Nia Griffith (Llanelli) (Lab)]

I object to the Government’s proposals to limit to 1% for the next three years any rise in income-maintenance benefits to low-income households, over 68% of which go to households in work, not households out of work. It is grossly unfair, hits the poorest hardest and will cause genuine hardship; it makes no economic sense whatsoever. Making real-terms cuts to low-income families will have a disastrous effect on local economies. People on low incomes and families who are struggling to make ends meet immediately, through necessity, spend what money they have and any increase they receive on basic essentials, putting that money back into the local economy. They have no choice about that. Low-income families have already been disproportionately badly hit because of rising food and fuel prices. Implementing these real-terms cuts will suck money out of the local economy, leading to more difficulties for local businesses, more shops on our high streets closing, and more job losses. This will particularly affect economically depressed areas where it is already hard to find another job, and more people unemployed means more people needing to claim benefits.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend makes an important point about jobs. The benefits bill is rising because of this Government’s failure on the economy and jobs. Does she agree that the Welsh Labour Government are showing the way with their Jobs Growth Wales fund, which is already ahead of target, in stark contrast to the failure of the Work programme, which has seen only two in 100 people put into work?

[Nia Griffith]

Indeed. What the Welsh Government are doing is absolute proof that we mean business in our motion and in saying that we need to create opportunities and make sure that people get back to work. The great thing about the Welsh Government’s programme is that they have been targeting private sector jobs having previously concentrated on public sector jobs. That is making a huge difference to the people who are able to take part.

The Bill will suck more money out of the economy. For example, House of Commons Library figures show that over the next three years the Government’s economic decisions will mean cuts in welfare benefits taking some £3.6 billion out of Wales. If we also add in the £2.4 billion in extra VAT that people will be paying, that amounts to a massive £7 billion coming out of the Welsh economy during this Government’s term of office. That is no way to foster economic growth.

It is a complete myth that people receive massive, generous amounts. Comparisons with actual living costs have consistently shown that what people receive is not generous to start with, but over the years there has at least been a recognition by Governments of all colours that allowances should be regularly upgraded to reflect inflation. As my right hon. Friend the Member for Rother Valley (Mr Barron) said, a decision to limit increases in the rate of income-maintenance benefits to below inflation for a sustained period is historically unprecedented. At a time when benefit allowances are down as a percentage of full-time earnings and prices of essential items are rising, this will lead to increased hardship and increased child poverty. House of Commons Library research shows that, as a result of these proposals, the real value of benefits and their value as a percentage of average full-time earnings will fall.

Much has been made by the Lib Dems of the raising of the personal tax threshold, but in reality this is a regressive measure. An analysis by Citizens Advice and the Resolution Foundation shows that the impact of capping benefits and tax credits will wipe out any gains from the increase in the personal tax allowance for those on low incomes—precisely the people it is meant to help.

I received a distressing letter recently from a woman who has been diagnosed with cancer that will require extensive surgery and follow-up treatment. She has been alarmed to discover the amount that she is expected to live on as statutory sick pay. She has worked all her life and made contributions. She has enough to cope with without having to worry about money. This Government’s Bill will make matters far worse for people such as her. To make a real-terms cut to statutory sick pay for one year, never mind three years, is an absolute disgrace.

This Bill will not help people on low incomes—in fact, it will make life extremely difficult for them—and neither will it help to get the economy going. What we really need is real growth strategy to get the economy going, and then we can talk about paying back the deficit.