Universal Credit (Children)

Debate between Stephen Doughty and Stephen Timms

Tuesday 10th May 2016 Commons Chamber

[Stephen Timms]

My hon. Friend is absolutely right. That is a shocking aspect of what has always been proposed with universal credit—the support for disabled children is being drastically reduced. I hope we will have time to discuss that.

Will the Minister publish an updated version of the impact report for universal credit that was published alongside the 2011 Welfare Reform Bill, which introduced it? I will come back to that, because what is now being introduced is certainly not what the previous Secretary of State had in mind when he launched the universal credit initiative six years ago.

Throughout the last Parliament, Ministers repeatedly said that they were committed to eliminating child poverty, and they cited the introduction of universal credit as key to helping to achieve that. The 2011 impact assessment, which I hope the Minister will update, said that universal credit would reduce child poverty by 300,000. A written answer in January 2013 gave the lower figure of 150,000, half the initial figure of 300,000. We have not had an update since the really big cuts to universal credit announced last summer. That is what I am hoping the Minister will give us.

All of us will recall the furore when the Chancellor announced swingeing tax credit cuts last summer. I pay tribute to those Government Members who, unlike the Chancellor, grasped what those cuts would mean to many hard-working families struggling to make ends meet, such as the family of an ambulance driver earning £20,000 a year, who stood to lose a full £2,000 from the cuts. Thankfully, the Chancellor was forced to abandon those plans. But the equivalent cuts to universal credit—at that time, claimed by hardly anyone in work—went ahead, so the Chancellor’s cuts to tax credits will, over time, be implemented by stealth. Working families on universal credit rather than tax credits saw a big income cut last month, as my hon. Friend the Member for Neath has already pointed out.

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

My right hon. Friend is making a strong point about the value of the cuts and the wider impact of the changes. Does he agree that there is a significant challenge with the move from weekly or fortnightly payments to monthly payments? With a week’s processing time for claims, and payments in arrears, that could leave five weeks before people receive claims under universal credit. We are told that there is an advance payment system but Citizens Advice has said that six in 10 clients coming to a citizens advice bureau about universal credit have not been told about it. We could see many people out of pocket and really struggling to get by, through no fault of their own. That can have a huge impact on children.

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[Stephen Timms]

Yes, the suggestion that people can make up those losses simply by working more hours is unrealistic in many circumstances. The Resolution Foundation also points out:

“For second earners in couples the situation may be worse still, with increasing numbers potentially deciding not to enter work at all.”

The whole point of universal credit was supposed to give people incentives to be in employment—indeed, yesterday the Secretary of State reiterated that point at questions to the DWP. The problem is that as currently proposed, those incentives will not be in place when universal credit is rolled out.

Let me draw the Minister’s attention to an article that was published last month and written by Deven Ghelani, who was one of the original architects of universal credit at the Centre for Social Justice. He describes the cuts to universal credit work allowances that were introduced on 11 April as

“undermining the original intent of Universal Credit—to make work pay…The Government should maintain support for work incentives within Universal Credit…these cuts to work allowances will not help to make work pay for low earners.”

That is a deep problem with what is now proposed.

The Minister will argue that calculations of child poverty—the reduction in child poverty of 300,000 that was announced by the Government in the original impact assessment for the legislation, and the subsequent written answer estimate of 150,000—do not allow for the dynamic effects of universal credit and of encouraging people into jobs. In his article, Deven Ghelani addresses exactly that point and states:

“Lower work allowances will limit the dynamic effect of Universal Credit and…will make it harder for households to make up their shortfall by working additional hours.”

That point was also raised by my hon. Friend the Member for Neath.

[Stephen Doughty]

I am sure that my right hon. Friend has had the experience of meeting many constituents who have to make agonising decisions when making up shortfalls in their income, particularly when it comes to children, whether for basics such as food and school clothes, or modest birthday presents. Sometimes that will force people down the route of getting into further debt, which further compounds their situation. We have seen the horrors of payday loan companies, and others, and many families will find themselves in difficult situations, particularly during that transition period, and they may end up getting further into debt.