Universal Credit

Stephen Timms Excerpts

Wednesday 19th April 2017 Westminster Hall

[Stephen Timms (East Ham) (Lab)]

Universal credit is often described as a troubled programme, and the problems with it go right back to the initial naivety of Ministers about implementing a programme of this scale. My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) pointed out in her excellent opening speech that we were originally told that it was all going to be done and dusted by October 2017. I was the Opposition spokesperson in this area at the time that was said, and I pointed out that that was not a plausible timescale. We are now told that it will be done by 2022, which is five years’ late, and it will be delayed further still.

The most astonishing example of naivety was in “21st Century Welfare”, a document published in July 2010. Paragraph 7 of chapter 5 says:

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

That is the heart of the problem. There was an utter failure at the outset to grasp the scale of what was involved; there has been not just one major IT project but several.

There is an enduring problem, which probably underpins a number of the difficulties that we have heard about today, including the unexplained overpayments that my hon. Friend referred to in her opening speech. That problem is the fact that real-time information does not work properly. RTI is the system through which employers notify Her Majesty’s Revenue and Customs in an automated way about how much they are paying to each of their employees in each month. It appears that there are serious inaccuracies in the data being sent to HMRC. Of course, those data are then sent on to the Department for Work and Pensions, and as a result errors are being made in the calculation of how much universal credit is due. It looks as though that will become an increasingly major problem.

It is well-known that there have been problems with RTI. We were promised that a post-implementation review was going to be published last month. It has not been published and there is no sign of it as yet, which reflects the scale of the problems that HMRC is facing. The Institute of Chartered Accountants in England and Wales submitted evidence to the post-implementation review almost exactly a year ago, saying:

“There is a significant risk to the successful roll-out of universal credit…if immediate steps are not taken to resolve the underlying system issues that lead to data corruption within HMRC systems, which are then passed on to universal credit claimants.”

Can the Minister give us any reassurance that these very serious problems will be fixed by HMRC before we have more problems of the kind that we have heard about today, or can he at least tell us when the post-implementation review of RTI will finally be published?

There are benefits, in principle, from universal credit; the hon. Member for North Swindon (Justin Tomlinson) has a point. Community Links—which works with jobseekers and claimants in my constituency and which has pointed out repeatedly what a grim experience going to the jobcentre has become since 2010 because of the changes that have been made—also says: “At its best, universal credit has transformed client-coach relationships for the better”. There is real potential and the system could be significantly better, but it will not improve and its potential will not be realised unless these major technical problems are resolved. I hope that the Minister will be able to give us some encouragement that they will be resolved.

--- Later in debate ---

[The Minister for Employment (Damian Hinds)]

It is a pleasure to serve under your chairmanship, Mr Nuttall. I echo what the hon. Members for Newcastle upon Tyne North (Catherine McKinnell) and for Wirral West (Margaret Greenwood) said about PC Keith Palmer and all the victims on that terrible day when last this debate was convened. I congratulate the hon. Member for Newcastle upon Tyne North on securing this important debate. We have had a wide-ranging debate today.

Let me be clear at the outset that the roll-out of universal credit continues to plan. As Members are aware, universal credit is now in every jobcentre in the country. The programme has just passed an important milestone of more than 1 million claims. The service has been deliberately rolled out in a steady way, as alluded to by some of my hon. Friends, using a test-and-learn approach to allow us to user-test the service and get immediate feedback.

In such a large system and organisation, with so many branches and so complex a set of data, I admit that sometimes things go wrong. That is not unique to universal credit, but happens and has happened on occasion for many years throughout such systems. Of course we very much regret that when it does happen, but it does not change the fundamentals of what the universal credit programme is achieving.

The longest-standing senior responsible owner and programme director in the programme’s history are in place, and both have been in post for well over two years. In that time the programme has stabilised and delivered all its key milestones on time and on budget. When last scrutinised by the Major Projects Authority, the programme was moved to an amber rating, which is rare for a project of this size.

Even having the best team in charge is not necessarily enough: it has to be combined with the right project disciplines and the proper oversight to ensure success. That is why the team is implementing a fully developed, agile approach to delivery, explicitly designed to ensure that the service is continuously improved, based on the user feedback that I talked about, and is flexible enough to adapt to changing circumstances or new information. The programme is also subject to comprehensive and rigorous review internally and externally.

All that combines to create the safest, most secure programme delivery achievable. We are working quickly, and will continue to do so, to deal with any challenges, which will of course emerge, to ensure that universal credit is delivered safely and securely. I recognise that there are concerns, and I welcome another opportunity today to discuss and address them.

As part of the UC full service implementation process, we had a full external stakeholder plan to ensure that those stakeholders have a proper introduction to the full service before it goes live in their area. The full service was launched at the Newcastle West jobcentre on 15 March 2017, making Newcastle one of the first core cities to transition fully to the service. I am also aware that the hon. Member for Newcastle upon Tyne North has been in contact with the local district manager for Jobcentre Plus on more than one occasion and that she has been invited for a visit.

A couple of hon. Members asked about the changes being made in the DWP estate. I reassure them that in the planning and modelling we of course account for all the changes to welfare systems and our support for claimants. An important point to make is that although we are changing some of the physical estate, which involves some jobcentres merging with others, we are not cutting back on our frontline people—in fact, we expect to have more work coaches working with and supporting people into and in work at the end of this process than we do at the beginning.

The scale and nature of the change represented by universal credit is bound to cause some anxiety, but the benefits it brings are many, going far beyond the £7 billion in annual economic benefits and even beyond the advantages to claimants of simplicity, stronger work incentives and personalised support. UC represents a generation-changing culture shift in how welfare is delivered and how people are helped, creating a system that allows people to break free from being dependent on welfare, to take control of their lives and to move into work. That will have an impact on a large number of people: we estimate that by the time UC is fully rolled out, about 7 million recipients will benefit from the advantages of universal credit.

We must remember that universal credit picks up from a flawed pre-existing system and strives to solve a number of problems that have for some time been thought to be near intractable. In the old system, complexity and bureaucracy had often served to stifle the independence, to limit the choices and to constrain the outlook of its recipients. With UC, we are untangling the bureaucracy, strengthening the incentives and simplifying the system and the signals it gives.

The behavioural effects we are seeing are strong. Claimants are responding to the clear incentives to work and, as my hon. Friend the Member for North Swindon (Justin Tomlinson) said, spending twice as much time looking for a job as they did under the legacy system: 113 people are moving into work under the new system for 100 under the old system. People throughout the country are therefore already benefiting from universal credit, and more will do so.

The design and structure of UC is transformational in its focus on replicating the world of work. UC encourages claimants to take greater responsibility for their finances and incentivises them to earn more and to make progress once in work. A flexible, clear and tailored claimant commitment helps claimants to understand fully their responsibilities, and a work coach provides personalised support, helping people to stay close to the labour market and to overcome whatever barriers they have to work.

Critically, universal credit removes the hours rules and the cliff edges that have long been a feature of our systems, plaguing legacy benefits and tax credits. UC removes the need to switch between different benefits as people move into and progress in work, simplifying the system and ensuring continuity. It provides a consistent taper for claimants as they move into and through work. The recent taper reduction will benefit 3 million claimants once UC is fully rolled out, providing further tangible and visible benefits to making progress in work.

Thanks to the real-time information link, immediate adjustments can be made to the UC award, which is far beyond the blunt mechanism of annual reconciliation. That also means that people can quickly see the effect of the changes they are making. For the first time we now have simple levers to optimise the system, creating a fully dynamic and adaptable welfare system fit for the modern world. Digital is at the heart of the new system. The majority of jobs these days require some computer capability and competency, so it is also right that the system to help people into work is digital, too, as well as more efficient as a result.

[Stephen Timms]

Will the Minister give way?

[Damian Hinds]

If the right hon. Gentleman will forgive me, I will not, or I will run out of time.

Let me assure the House that I recognise what a complex and important issue housing arrears are. Many different factors are at play. As colleagues know, UC pays housing costs directly to the claimants and they pay rent to their landlord. That mirrors the world of work, which is an important part of the fundamental culture change I mentioned. That of course has been the case for some time, since the Labour Government rolled out the local housing allowance in the private rented sector in April 2008.