Universal Credit and Welfare Reform

Stephen Lloyd Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Duncan Smith]

I have given way quite a bit. If the hon. Lady will give me a little leeway I will give way again later, but I want to make some progress.

A single payment, withdrawn at a clear and consistent rate when people move into work, will make work pay at each and every hour and remove the stumbling block in the current system whereby, as I said earlier, some people lose out dramatically. They lose 96p in every pound that they earn, which cannot be an incentive to go to work. Nobody here would take work at that rate, and trying to get the deduction rate down has to be a good reason for our reform.

The Opposition say that they are concerned about work incentives under universal credit. I reassure them that, as I said earlier, the flat 65% withdrawal rate will mean reduced marginal deduction rates for 1.2 million households. What is more, 80% of those gainers are in the bottom 40% of the income distribution. Why am I, as a Conservative, having to stand here and tell the Opposition that that is positive? Surely they should have ensured that it happened during all the years when they were in power.

[Stephen Lloyd (Eastbourne) (LD)]

The Opposition have mentioned the Work and Pensions Committee a few times. I am a member of that Committee, and although the Opposition are absolutely right to say that there were some concerns about universal credit, the Secretary of State might be interested to know that the Committee universally supported the concept of universal credit to make work pay.

[Mr Duncan Smith]

I thank my hon. Friend for those comments.

--- Later in debate ---

[Stephen Lloyd (Eastbourne) (LD)]

It is a privilege to speak in this debate and to follow the right hon. Member for Birkenhead (Mr Field), whose speeches on this matter I have read for many years.

The issue of benefit dependency was one of the triggers that drew me back into politics 10 or 11 years ago. That is why, once I was elected, I became a member of the Work and Pensions Committee. I have been very involved in its work ever since, along with the hon. Member for Aberdeen South (Dame Anne Begg).

We must remind ourselves of the figures that have been talked about. There are more than 2 million children in the UK living in households in which nobody is in work. That figure is from 2005 or 2006, when the economy was booming. I imagine that the figure is much higher today, because of the recession that we have been in since 2008. The Secretary of State reminded us that there are more children in workless households in the UK than across the rest of the EU, which is a shocking statistic. Such figures are the reason many Members from all parties feel so strongly about this subject. Although there are anxieties about universal credit, which I will touch on in a minute, we all in our hearts hope and pray that it works.

Over a period of 30 or 40 years, not because of a conspiracy or through malice, but through society trying to do the right thing, a chronic situation has developed in which for many of our neighbours, colleagues and constituents, it simply does not make rational sense to work. I spoke to a young woman on Saturday at my surgery. She had come to see me about a different issue, but we got on to this matter because she knows that I feel strongly about it. She pointed out that she was losing five or six quid a week by working. It would make financial sense for her to go on to benefits. Luckily, she is the sort of person who would see that as the road to perdition, so she is sticking to her job, hoping that she will earn more money in a year or two. I thought to myself, “This is absolutely insane. How have we got here?” We all know that it has been down to a series of actions over 30 or 40 years, but we are where we are, so how do we change things?

I am anxious that someone with such a reputation on the subject as the right hon. Member for Birkenhead feels so negative about universal credit. That makes me nervous, because he has a lot more experience in this area than I have. None the less, let us see what we have got. We have got the biggest shake-up of the system in 40 years. That is not necessarily a good thing—a number of colleagues have talked about the history of public sector IT programmes, and I do not even want to go there—but it is a substantial change.

I defer to the right hon. Gentleman somewhat—forgive me for mentioning him again, but it is a privilege to speak straight after him—in agreeing with him that the opinion has become ingrained in many of our citizens over a number of generations that there has to be some sort of means-testing process to get people into a position in which they are prepared to work. That is linked to the Work programme. For all its challenges, of which there are many, it recognises that we have to offer training providers enough money that it is worth their while to get people into work and sustain them there.

I mention that because before I was elected I was a trustee of the Royal National Institute for Deaf People and was involved in a number of disability charities. For many years, training providers used to do what they called creaming and parking. They would take people who were job-ready from the jobcentre, turn them around very quickly, get them a job and take the money from whichever Government were in power, either Labour or Conservative. The premium for those providers was so little that they put people who were a long way from the job market in a corner and did not bother with them. That situation built up over a period of time. As we know, the Work programme is modelled in such a way that training providers stand to gain a considerable amount of money if they get long-term benefit recipients into work. I am keen on that. I want the directors of training providers and the people who work for them to end up as wealthy men and women, because I know that if that happens, we will finally break the desperate cycle that has gone on for 30 or 40 years and third-generation benefit dependants will be getting jobs. Universal credit is crucial to that.

Will universal credit work? That is the $64,000 question. The Secretary of State is confident about the IT and confident that the programme is on budget and on time. Like a lot of Members, I hope and pray that he is right, because I do not want to wait another few years for the Labour party to come up with a plan, perhaps one put together by the right hon. Member for Birkenhead. It lost that opportunity 12 or 13 years ago. Frankly, I think that is a shame, but that is by the by. I am not confident that his ideas will ever come through into Opposition policy, so universal credit has to work. I urge the Secretary of State and the Department to listen to some of our procedural concerns about monthly payments, council tax benefit and which primary earner will get a household’s money, but otherwise I support universal credit wholeheartedly and look forward to its implementation.