Universal Credit

Stephen Timms Excerpts

Monday 7th July 2014 Commons Chamber

[Glenda Jackson]

It is not usual for me to be gobsmacked, but I certainly am by that story, even though I have heard from constituents who, while not necessarily experiencing heart attacks, have had absolutely disgraceful treatment. We are also seeing a rise in the number of appeals concerning employment and support allowance, and the appeals that have been lodged are taking longer and longer to come to a conclusion. I will not go into the whole debacle of the personal independence payment, but it is simply scandalous that some of the most vulnerable people in our society, whom the DWP is supposed to be assisting, are being left in many instances with no financial support whatever. To add insult to injury, this Government have also reduced the funding of local authorities. Many local authorities were absolutely central to ensuring that people with disabilities could live human, productive lives. That money has now been taken away.

I hope to bring home to the Chamber the absolute chaos out there at the moment, and to concentrate on the questioning that an individual claimant has to go through and the kind of questioning to which the Secretary of State responds. It is clear that he is burdened with delusions of adequacy, but some of his responses to my hon. Friend the Chair of the Select Committee at his most recent appearance in front of us were absolutely disgraceful.

Let me detail the experience of an individual claimant. A 71-year-old pensioner, dubbed by Her Majesty’s Revenue and Customs to be self-employed, applied for housing benefit. It has now taken 17 weeks and still there is no final cut-off point where she has been assured that she will receive housing benefit. The most recent inquiry that came to her was to detail the cost of a bill of £3.40; the second was to detail the cost of a bill of £7.47. Both of those claims took place in 2012. The mind boggles at that, when the Secretary of State, who has lost millions and millions of pounds on a failed IT system, has categorically refused to give the Select Committee any detail whatever about his newly trumpeted business plan. He has refused to discuss the costs of the plan or whether there will be any direct savings either to the taxpayer or to the overarching benefit system. It is an absolute disgrace that the Select Committee, which has been appointed to scrutinise the DWP, is being buffeted away. It seems that the Department is opting for some kind of bunker mentality, but it will not work.

[Stephen Timms (East Ham) (Lab)]

My hon. Friend is making a powerful case. Was she as surprised as I was to learn in the evidence given by Sir Bob Kerslake to the Public Accounts Committee this afternoon that the business case that she has just mentioned, which, according to the report, is due to be finalised by the end of April, has still not been agreed by Her Majesty’s Treasury?

[Glenda Jackson]

I am sure that my right hon. Friend, and I would hope every Member of this House, would be shocked to realise that the DWP is still not giving the right answers—it is ludicrous to expect the right answer to come from the Department for Work and Pension, as simple humility is not part and parcel of its make-up. The Committees and Government Departments that scrutinise where public money goes are being pushed to one side. I have already referred to the bunker mentality of the DWP, and the example that my right hon. Friend gives me is just par for the course; it happens constantly. Arguments are not even being put up. We are all being told, “Oh no, it’s none of your business; it’s our business.”

My hon. Friend the Chair of the Select Committee has given details of the actual answers. There is a pattern, which I find very disturbing. I have already touched on the issue of disregarding any serious questioning on costs. Ever since this major benefit change came into being, the Department has employed what I would call a programme of black propaganda, and every single one of the red tops has taken it up with glee and run with it. That black propaganda told the people of this country—I am paraphrasing; the DWP would never be this cogent—that everyone who was claiming benefits was doing so because they were too lazy to work. Nothing could be further from the truth. I have already touched on the agonies that are being endured by people with serious mental and physical disabilities, and the pattern is ongoing.

A report from the Office for National Statistics last week scrutinised the level of complaints made against all the Government Departments about the misuse of statistics, and guess which one came top of the list! It was the Department for Work and Pensions. Throughout the time I have been a member of the Select Committee, we have raised again and again the issue of the misuse of stats and the misuse of the English language to proselytise this black propaganda and to confuse and distort what should be central to the Committee’s concerns—namely, the well-being of the people who require benefits, not because they are lazy or workshy, or even because there are no jobs, but because they should be supported by the people of this country, as they always have been.

After the last debate on this issue, I was touched to receive a response from the people of this country. If there is a silver lining to the black cloud that is the DWP, it is that the majority of people in this country still believe that the welfare state should do what it was meant to do, which is to support people who, through no fault of their own, cannot maintain themselves without the support of the rest of us. That support is alive and well out there in the country. The one place where it is certainly dead is within the Department for Work and Pensions.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

The Work and Pensions Committee has done the House a service with its report, and the tributes to its Chair from both sides of the House are well deserved.

The hon. Member for Newton Abbot (Anne Marie Morris) is absolutely right to say that there is widespread agreement that universal credit is, in principle, a good idea, but I am afraid the universal credit project has had all the hallmarks of disaster right from the start, as a number of us pointed out at the time. Everybody hoped, as we were assured, that the lessons of previous failures had been learned, but unfortunately they had not.

It started to go wrong within just a few weeks of the general election. Ministers published a Green Paper entitled “21st Century Welfare”—I have my well-thumbed copy with me—which introduced the idea of universal credit. Paragraph 7 of chapter 5 stated:

“The IT changes that would be necessary to deliver a more integrated system would not constitute a major IT project”.

There was an utter failure, right at the outset, to grasp the scale of what the Government were about to embark on. How on earth the phrase “would not constitute a major IT project” came to be written in a Green Paper, I have absolutely no idea, but I am quite sure that no official in the Department would have been responsible for writing such a ludicrous claim. I am afraid that from that moment on, things have got progressively worse.

Will the Minister comment specifically on my intervention on my hon. Friend the Member for Hampstead and Kilburn (Glenda Jackson) about this afternoon’s announcement by the head of the civil service, Sir Bob Kerslake, in evidence to the Public Accounts Committee, that the Treasury has not yet approved the revised business case? A week ago today, the Minister said in response to a question from my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Secretary of State for Work and Pensions:

“The Chief Secretary to the Treasury has approved the UC Strategic Outline Business Case plans for the remainder of this Parliament (2014-15) as per the ministerial announcement (5 December 2013, Official Report, column 65WS)”.—[Official Report, 30 June 2014; Vol. 583, c. 434W.]

The Minister said that the Treasury had agreed the business case, but today the head of the civil service told the Public Accounts Committee that the Treasury has not agreed the business case. The Minister owes us an explanation of the discrepancy between her answer a week ago and what the head of the civil service has said today.

The project has suffered from three levels of failure: policy failure, delivery failure and governance failure. I will say a little about each of them. First, policy failure is perhaps the most serious one. As the hon. Member for Hornchurch and Upminster (Dame Angela Watkinson) has rightly pointed out, the point of universal credit was to make sure that people would be better off if their income increased because they got a job or did extra hours or for some other reason. However, the difficulty involved in achieving that apparently simple goal was never understood by Ministers, and the hard graft of delivering it has therefore never been done.

Last September’s National Audit Office report, which my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) has rightly described as cataclysmic, noted:

“Throughout the programme the Department has lacked a detailed view of how Universal Credit is meant to work.”

That has been the central failure: the Department simply has not worked out what the system is supposed to do.

More than three years after the implementation of universal credit started, we still do not know, as we have been reminded in this debate, which recipients of universal credit will be entitled to free school meals for their children. That is not a minor detail; it is a very serious problem for the aim of making sure that people are always better off if their income goes up. If the truth is that a household will suddenly lose their entitlement to free school meals if they reach a specific income threshold—that appears to be where we are heading—of, for example, £9,000 a year, their income will be a great deal less than it was before the small increase that triggered that change. The Citizens Advice briefing for today’s debate has an example of a lone parent who, if free school meals are decided on the basis of income threshold,

“will be worse off by taking on extra work however many hours she works”.

Solving that genuine policy difficulty is at the heart of what the Government are trying to do with universal credit. As my hon. Friend the Member for Edinburgh East (Sheila Gilmore) has reminded us, she and I served on the Welfare Reform Bill Committee. On 24 March 2011, the Secretary of State said:

“we have to resolve some of these issues like free school meals…You asked when. I believe that during the Committee stage we should be in a much stronger position to make it much clearer how we will do that.”––[Official Report, Welfare Reform Public Bill Committee, 24 March 2011; c. 154-55, Q299.]

The Committee stage ended on 24 May 2011, just over three years ago. When I asked the Schools Minister about the subject last Thursday, he said that an announcement would be made “shortly”. It appears that we are heading for some sort of income threshold. If that happens, it will create a huge new work disincentive in universal credit for a very large number of people that will be far worse than anything in the current system, for all its flaws.

The universal credit rescue committee—I am grateful to the hon. Member for Warrington South (David Mowat) for drawing attention to its work—submitted its report to the Labour party two weeks ago. It pointed out that the work incentives for second earners in a couple are a good deal worse in universal credit than they are in the current system. My hon. Friend the Member for Oldham East and Saddleworth underlined the importance of that point.

Leaving council tax support out of universal credit undermines simplicity, with many claimants facing two separate rates of benefit withdrawal when they move into work or their incomes increase.

The decision to pay universal credit to only one member of a couple, rather than reflecting the current system in which payment with respect for children is paid to the main carer—an arrangement with which you, Madam Deputy Speaker, are particularly familiar—raises significant risks for many women and their children.

Universal credit also creates an extraordinary new red tape burden for self-employed people and partners in small partnerships who want to claim universal credit. The Institute of Chartered Accountants in England and Wales says that about 60,000 partners in small partnerships will want to claim universal credit and that it will be virtually impossible for them to meet the proposed red tape challenge.

It is the policy failures that are the most serious, but it is the delivery failures that are the most spectacular. As the Minister for the Cabinet Office said in a television interview, implementation has been “lamentable”. I wrote to the Secretary of State on 16 November 2010 to point out that his timetable was unrealistic, and I wrote to him again on 18 April 2011. The Secretary of State wrote a perfectly friendly response on both occasions, but simply denied that he had a problem.

In November 2011, the Secretary of State announced that 1 million people would be claiming universal credit by April 2014; in fact, there were approximately 6,000. In May 2012, he announced that new applications for existing benefits and credits would be entirely phased out by April 2014; Ministers now say that that will not happen until 2016. Even assuming that everything goes well from here, which it will not, the project is at least two years late.

Late last year, it was finally admitted that the transition to universal credit will not be complete by 2017. Everybody has known that for months. The hon. Member for Amber Valley (Nigel Mills) was right to make some very thoughtful comments about that. However, while everybody knew about the problems, Ministers flatly denied them. The Secretary of State told the House on 5 September 2013:

“The plan is, and has always been, to deliver this programme within the four-year schedule to 2017…that is exactly what the plan is today. We will deliver this in time”.—[Official Report, 5 September 2013; Vol. 567, c. 472.]

That was complete fantasy. He was still doing it on 18 November, when he said that

“universal credit will roll out and deliver exactly as we said it would.”—[Official Report, 18 November 2013; Vol. 570, c. 947.]

Everybody knew that that was untrue. Why do Ministers not simply tell us the truth about what is going on? Some £40 million has been written off so far, with more undoubtedly to come.

I was worried about achieving one universal credit IT system in anything like the proposed time scale, but we are now in the extraordinary situation of building two different universal credit IT systems. How much more will that cost? The Select Committee asked that question—surely that is what Select Committees are supposed to ask about—but the Government response simply does not provide any answers. Surely we can at least be told how much extra it will cost us to have two IT systems instead of one.

Lessons also need to be learned from another group of serious failures—the governance failures in the project. To answer the question quite rightly asked by the hon. Member for Warrington South, five different officials have had responsibility for the project since it started. However, the central problem is that the project has been managed primarily with a view to minimising embarrassment for the Secretary of State. That is essentially what decisions have been about. Problems, when obvious, have simply been denied; information that would have shed light on what was going on has been buried; and the people who have asked difficult questions have been fobbed off. Members of the public have made freedom of information requests to see the risk register, the milestone schedule and the project assessment review, but applications have of course been refused, and when the Information Tribunal found in favour of those members of the public, the Department simply appealed again.

Ministers are absolutely determined that nobody should know what is really happening. With this project, there is an obsession with hiding things; of pretending that all is well when it obviously is not; and, as the National Audit Office has pointed out, of only admitting to good news. That is not a culture that will deliver a successful project, and it certainly has not delivered success in this case. My hon. Friend the Member for Hampstead and Kilburn referred to a “bunker mentality”, and there absolutely is such a mentality.

Obsessive secrecy has no doubt spared the blushes of the Secretary of State, at least for a time, but it has hindered progress on the project. It has meant that it has taken longer than it should have done to recognise problems and to deal with them, and a large amount of money has been wasted. If, two years ago, the Secretary of State had put up his hands, and recognised that he and his advisers had got it wrong and that the project would take longer than they first said, much of the subsequent waste and delay could have been avoided. Instead, they just kept on denying that there were any problems, so the problems kept on getting worse—and the project is not finished yet.

The project is at least two years late, and it will have wasted much more than the £130 million already acknowledged. It is essential, as the universal credit rescue committee has argued, that the project is now paused. Central policy decisions still have not been made—Ministers cannot spend hundreds of millions of pounds on an IT system if they do not know what it is supposed to do—and Ministers have not made such decisions. As has rightly been said by the rescue committee, taking advice from the former chief information officer of Rolls-Royce, who served on it with distinction, we need a plan that is published, is audited by the National Audit Office and contains milestones with dates, so that everybody knows how the project is going. Why pretend that it going well when it clearly is not?

[David Mowat]

The point I made was that the review could be done in parallel with continuing the programme. Let us say that 1,000 people are working on the programme at the moment. What will the right hon. Gentleman do with those 1,000 people during that three-month review?

[Stephen Timms]

As I have said, the idea for the pause is based on the recommendation of Jonathan Mitchell, the retired chief information officer of Rolls-Royce, who has managed extremely large IT projects in that company—possibly even larger than those for which the hon. Gentleman had responsibility. He has said that when a project is as out of control as this one clearly is, it is essential to stop, to make policy decisions and to draw up a plan before simply shovelling in hundreds of millions pounds more.

[David Mowat]

Will the right hon. Gentleman give way?

[Stephen Timms]

I will not, because I should conclude.

Outstanding policy issues need to be decided, the work incentive design flaws need to be fixed and a hard-headed view needs to be taken about whether this project can be rescued within an acceptable time and cost. Opposition Members hope the answer to such a question will be yes, but we cannot assume that it will be. The question needs to be asked frankly and answered honestly. It should not be left until the election; it should be done now.

--- Later in debate ---

[Esther McVey]

I thank my hon. Friend. That is why we are learning as we are rolling the system out and using that to inform what we are doing.

We have a multi-disciplinary team of 90 people, 30 of whom are digital specialists. They are developing the digital system as we go along. It is not a twin-track approach. We are continually learning and informing. We have one system. That is what we are doing. I hope that that goes some way towards answering the questions that have been asked about IT. One thing that we can all agree on is that it is complex. We will learn as we go along and we have the right person doing the job.

[Stephen Timms]

Is it the case, as the Minister said in her written answer on Monday last week, that the Treasury has approved the universal credit business case—yes or no?

[Esther McVey]

I have just had the answer that I gave last week checked. It stated:

“The Chief Secretary to the Treasury has approved the UC Strategic Outline Business Case plans for the remainder of this Parliament (2014-15) as per the ministerial announcement (5 December 2013, Official Report, column 65WS)”—[Official Report, 30 June 2014; Vol. 583, c. 434W.]

That was the response and I have just had it verified.

[Stephen Timms]

Will the Minister tell us, then, why the head of the civil service today told the Public Accounts Committee that the Treasury has not approved the universal credit business case?

[Esther McVey]

I will look into that additional point and get back to the right hon. Gentleman. On his last point, I have had the answer checked by my officials and it was correct.

On the roll-out, the new service is now available in 24 areas across England, Wales and Scotland, where it is providing people with stronger incentives and support to get into work, stay in work and increase their income. On 23 June 2014, we began rolling out universal credit for single people to jobcentres across the north-west of England, starting with Hyde, Stalybridge, Stretford, and Altrincham. Last week, it went live in Southport, Crosby, Bootle, Bolton and Farnworth. I am pleased to say that today, Wirral, Birkenhead, Bromborough, Hoylake, Upton and Wallasey began accepting claims for the new benefit. Once the north-west expansion is complete, 90 jobcentres—that is one in eight jobcentres in Britain— will be offering universal credit.

From 30 June, we expanded the service to couples in five of the existing live areas: Rugby, Bath, Inverness, Hammersmith and Harrogate. That meets our commitment to expanding the new service to more areas and to more claimant types from this summer. We will continue to roll out universal credit carefully in a safe and secure manner—starting small, testing and learning from delivery. That remains the right approach. Later in the autumn, it will be expanded to include families.

My hon. Friend the Member for Warrington South answered the question about whether somebody will be able to feed in information about how many hours they work per week. Such real-time information is another part of the programme that we had the foresight to put in place. That is working well and the roll out of it is nearly 100% complete—it is more than 99% rolled out.

I have just received a quote from a claimant in Warrington who is working 20 hours a week:

“I’m currently working 20 hours a week but am able to pick up extra hours when overtime is on offer because UC is flexible in that way and I don’t have to worry about my benefit just stopping if I work more than 16 hours. I know I will still get support until I earn enough to completely pay my own way”.

That is what we always intended to happen. There is a cushion of benefit to support people, but they are able to take extra hours and to progress in work without being stopped from working by the old-fashioned rules and regulations that Labour Members allowed to continue for so long. That is what we are trying to change. We all agreed, including the Select Committee, that those changes were needed. That is an example of a claimant saying what is happening to them right now under this system.

Sadly, I come to the questions that were asked by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams). One thing on which we agree is that the media must talk about people and depict people carefully and sensitively. Nobody wants to point the finger at anybody. Nobody on the Government Benches has used any inflammatory language, because that is not right. I have always been very careful about the words that I use, because we all know people who have fallen on hard times and have needed the support of the state. It is imperative that each and every one of us checks our language, because it means a lot, whether it is on the internet, in newspapers or on the radio. I totally agree with her about that.

However, I totally disagreed with the hon. Lady—I am sure she will understand this—when she asked how the Secretary of State is still in his job. I had to smile at that rather absurd comment, given what he has delivered in four years. We have a record number of people in work. We are delivering on youth unemployment: it has gone down consistently for nine consecutive months. It is now 100,000 lower than when Labour was in office. Under Labour, youth unemployment went up by 45%. We have had the biggest fall in long-term unemployment, which doubled under Labour, since 1998. There is not just a record number of women in work, but a record rate of women in work too. All of those things are why the Secretary of State is still in his job: he has changed things around fundamentally.

The hon. Lady talks about a £40 million write-down. Projects of this size usually have about 30% write-down rate—this has a 10% rate. Labour’s track record of IT failure is £26 billion written off with no scope whatever, so we can move on to why universal credit is so important. Even the Joseph Rowntree Foundation is very clear about the benefits of universal credit, recently stating:

“Universal Credit is a once in a generation opportunity to reform a failing and overly-complex system. It will revoke the worst work incentives of the current system, smooth transitions in and out of work and make it easier for people to access all the support they are entitled to.”

Those are the reasons why we are correct in pursuing universal credit.