Financial and Social Emergency Support Package

Stephen Timms Excerpts

Wednesday 25th March 2020 Commons Chamber

[Jesse Norman]

It is not in my power to say yes to that, I am afraid, but the request has been noted and, of course, I will pass it on.

I think I can speak for everyone in this House in wanting to put on record my thanks to all those across Government, in Parliament and in our public services who have made this astonishingly fast speed of reaction possible. The result has been an unparalleled package of measures that we have brought forward with great rapidity and resolve, and I pay tribute to them for that. I reassure the House that Ministers and officials continue to work day and night to consider how best to provide further support, including for the self-employed, which I will touch on later.

Ultimately, however, success in defeating this virus rests not with Ministers and officials in Whitehall, but on the actions of millions of individual people throughout the country. Our common aim must be to reduce the rate of infection and prevent the national health service from becoming overwhelmed. In that way, our doctors and nurses, and all those who support them, can focus on helping those in greatest need. Every man, woman and child can be a lifesaver by staying at home, only venturing out when strictly necessary for food, medicine and essential exercise, and even then staying at least two metres away from other people.

The Government are in no doubt of the scale of the challenge. The action that we must take collectively represents a profound, but temporary change to our way of life in this country. Indeed, it runs counter to human nature.

[Stephen Timms (East Ham) (Lab)]

Does the Minister recognise that, in order to be able to stay at home in the way he is describing, people need financial support? Will he respond to the shadow Home Secretary’s earlier point that large numbers of people working legally in the UK have no recourse to public funds? At the moment, there is no support available to enable them to self-isolate in the way he is rightly advocating.

[Jesse Norman]

I thank the right hon. Gentleman for the question. Of course, if people are falling through the social safety net as it presently exists, we will stand ready to address that and support them. He will recall that when the Prime Minister was Mayor of London he called for an amnesty on illegal immigrants and others, so he has a wide and capacious interest in that area.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

I am pleased to follow my right hon. Friend the Member for North Durham (Mr Jones). I begin my echoing his appeal for support for local charities and community organisations, on which we are going to be very dependent over the next few weeks, and which we need to survive the challenges they face with loss of funding, bookings and so on in the period ahead.

I warmly welcome the employment support package announced by the Government last week, including the commitment to pay up to 80% of the wage costs of those employees who are furloughed. I welcome the fact that it came forward quickly, just one week after the Budget. A huge package was put together in a very short period and I congratulate those responsible for it. I must say that, over the following week, the package has stood up quite well to the scrutiny to which it has been subject. The Government and those involved can take credit for that.

Like others, I think it is a shame that we still do not know what is going to be done for self-employed people. It is particularly regrettable that we are not going to know before the House rises, so Members are not going to be able to scrutinise that package when it is unveiled. Inevitably, we need to talk about the position that self-employed people are going to find themselves in over the next few weeks. Whatever is in that package tomorrow or the following day—I have no idea what is going to be in it—it is clear that universal credit is going to have to carry a fair amount of strain in supporting people through the period ahead.

I therefore want to speak about universal credit, picking up on some of the points made by the hon. Member for Glasgow South West (Chris Stephens), who was at the Select Committee on Work and Pensions session that I chaired this morning. He has referred to the very large number of people who have applied for universal credit—470,000 since Tuesday of last week, and 105,000 yesterday—and it is a good thing that, so far, the systems have not collapsed. We can be thankful for that. Like others, I have seen screenshots telling people that they are in a queue—due to the incredible volume of new users, there is a queue—and:

“Number of users in queue ahead of you: 79129. Your estimated wait time is: more than an hour.”

Indeed, it is quite a lot more than an hour.

It is right, however, to pay tribute to all those in the Department for Work and Pensions who are working very hard to deliver much-needed urgent support over this period. I am grateful to the DWP’s permanent secretary for offering this morning to give the Select Committee weekly updates on how things are going. It is clearly very important that, once people apply for universal credit, they get the help to which they are entitled quickly, because people are going to need urgent help, including those self-employed constituents we have heard about whose businesses disappeared last week. They need help urgently.

[Chi Onwurah]

My right hon. Friend is making an incredibly important point about universal credit.   The system of universal credit has been in design for years and was supposedly designed, so we were told, to be agile, adaptable and scalable. Is this not absolute confirmation that the system cannot be effectively scaled? Does he agree that universal credit needs to be scrapped and a system put in place that actually works?

[Stephen Timms]

I am grateful to my hon. Friend. We took evidence this morning on that very point—the need to improve universal credit and change some of the problems. Unfortunately we were told that, because of the IT systems, there is very little that can be done in the short term.

For example, one thing the Government have agreed to do is reduce the maximum deduction from people’s standard payment of universal credit. There are deductions for people to pay back the advance they receive up front and for other reasons. There is a case for suspending those deductions for the time being, but that is not the Government’s intention at the moment. They have agreed that the maximum deduction will be reduced from 30% of the standard amount to 25%, but they tell us that they cannot do that until October 2021 because of the problems with the IT system.

I am grateful to my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) for reminding the House that, years ago, we were all told that this was going to be done in agile, precisely in order that changes could be made quickly. I am afraid that those promises have not been fulfilled. We were assured time after time that all the problems of the old DWP systems would be solved by adopting the agile approach. Sadly, that does not seem to be the case. Despite that, I am going to press this afternoon, as I and the Committee did this morning, for changes to universal credit. A way has to be found to overcome some of the problems and to get these things done much more quickly than is suggested will be the case.

I very much welcome the fact that the headline rate of universal credit and working tax credit has been increased, although only for a year. Given the long freeze in the rates of benefits, there is a case for making that increase permanent rather than temporary. That is something we will no doubt come back to in the months ahead.

When it comes to universal credit providing much needed support to the self-employed, people who come off zero-hours contracts and freelancers, there are some serious problems with the way it works at the moment. The Trussell Trust has found that people on universal credit are two and a half times more likely to need a food bank than people on legacy benefits, such as jobseeker’s allowance.

There is a remarkable article in this month’s issue of The Lancet Public Health about universal credit, which finds that

“an additional 63674…unemployed people will have experienced levels of psychological distress that are clinically significant due to the introduction of Universal Credit”.

It goes on to estimate that more than a third of those people

“might reach the diagnostic threshold for depression.”

A little further on, the article states:

“When the policy change was introduced, the prevalence of psychological distress started to increase among those eligible for Universal Credit; however, the prevalence remained constant for people not affected by the change”.

Lastly, the article states:

“We also tested if there was an increase in the number of participants transitioning from unemployment into work in the intervention group after the introduction of Universal Credit relative to the comparison group; the reform had no effect on employment”.

There are serious problems with the way universal credit is working, and we are now forcing—understandably—hundreds of thousands of additional people on to this benefit. What is the problem? Why does it cause so much more difficulty for people than jobseeker’s allowance and other past benefits? A big part of the answer is the fact that people have to wait five weeks after applying to receive their first regular benefit payment. That is inevitably pushing people into debt with the Department for Work and Pensions. A lot of people are then choosing to say, “In that case, I’d better not pay my rent for a bit,” and they are getting into rent arrears. The National Housing Federation is reporting that people on universal credit are significantly more likely to be behind with their rent than people on jobseeker’s allowance, both in the past and currently. This is a problem that will affect very large numbers of those who are now applying for universal credit.

It seems to me that it cannot be a good idea—given the boldness and generosity and the welcome characteristics of the package for employees that was introduced last week— to force self-employed people, by contrast, on to an arrangement where they do not get a substantive payment for five weeks.

[Mr Dhesi]

Does my right hon. Friend not agree that many of the individuals on universal credit and jobseeker’s allowance are having to go to food banks, and at the very time that we need support for food banks, many food banks are unfortunately having to close because of the age demographic of the volunteers, who are normally a lot more mature? That is why, within this package, we need more support for food banks and the charitable sector.

[Stephen Timms]

My hon. Friend is absolutely right. I very much agree about the need for more support for charitable organisations. I spoke yesterday to the chief executive of the Trussell Trust, who told me that of its 1,250 food banks, two have closed so far. One of them is reopening and some other arrangement is being put in place for the other one instead. It is a remarkable tribute to exactly the people that my hon. Friend refers to, who are running those food banks, that despite the potential risks to them, they are carrying on. The whole House will be grateful to them for their extraordinary effort.

[Catherine West]

My right hon. Friend is making an excellent speech. One of the constituency inquiries coming into inboxes at the moment is about the availability of certain food products to elderly people. Even those who do not need to go to a food bank but who are trying to get food from supermarkets find that the things that they want are not being fulfilled on their lists. Therefore, that is creating a situation of food insecurity, whether people have the money or are on universal credit. In general, the food supply is a really tricky situation, which the Department for Environment, Food and Rural Affairs could look into.

[Stephen Timms]

That is one of quite a number of anxieties that are around at present.

What should happen with universal credit is that the advances that are payable to people up front—about a quarter of those who have been applying over the last few days have applied for an advance—should be converted to grants for the duration of the current crisis. We were told this morning that it is very difficult to change the IT so that the advances are not automatically clawed back from subsequent payments, but I really cannot believe, even with this extraordinary IT system that appears to be in place, that that is beyond the wit of those who are running it to manage. It is a very simple thing: just do not claw back the advances from subsequent payments, because otherwise, people will ask how the Government can treat self-employed people so badly by comparison with the package for employees.

I also think that the current savings limit for eligibility for universal credit needs to be lifted, if it is going to do the job of supporting self-employed people. At the moment, if someone has more than £16,000 in savings, they get nothing at all from universal credit. If someone has more than £6,000 in savings, the amount that they get in universal credit starts to be reduced. If we are going to support adequately self-employed people over the next few months, that needs to change.

I hope as well that during this crisis, there will be a long and careful look at the rules around sanctions for universal credit. People will not be required to go into jobcentres for the time being, which is welcome—I am glad that that has been announced—but I hope the opportunity is taken to ensure that sanctions are not applied, because people will not be required to look for work in the normal way. As for the handling of deductions for past debts—tax credit overpayments and that kind of thing—I hope that there will be some easements in the application of terms.

I very much welcome the increase in the local housing allowance, which is back up to the 30th percentile. I hope that it will stay at that level so that it can adequately support rent in the future. However, there is a problem in London of the interaction between that new higher level of the local housing allowance and the separate housing support cap, which means that many renters in London will not be able to benefit from the increase in the local housing allowance. I hope that the cap will be addressed. I was disappointed this morning to hear that there will not be any change in the overall benefit cap level, and I think that that may well need to be looked at again as things develop over the next few months.

My final point has been referred to already a number of times in this debate. There is a large group of people in my constituency, and in many others, who are hard-working, law abiding, and permitted to work in the UK, but they do not have indefinite leave to remain and they do not have recourse to public funds. That means that if they have to stop working because they have to self-isolate, or because their business has collapsed, they will get no help at all as things stand. We do need people in that position to be able to support themselves, because, otherwise, they will have no alternative but to carry on working at risk to themselves and to wider public health. I want to end with a plea that the Government should, at least temporarily, lift the restriction of no recourse to public funds to those who have leave to remain but not yet indefinite leave to remain.