Universal Credit: Court of Appeal Judgment Debate

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Department: Department for Work and Pensions

Universal Credit: Court of Appeal Judgment

Stephen Timms Excerpts
Thursday 25th June 2020

(3 years, 9 months ago)

Commons Chamber
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.

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Stephen Timms Portrait Stephen Timms (East Ham) (Lab)
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(Urgent Question): To ask the Secretary of State for Work and Pensions if she will make a statement on her Department’s response to the decision of the Court of Appeal of 22 June 2020 in the case Johnson, Woods, Barrett and Stewart v. the Secretary of State for Work and Pensions.

Will Quince Portrait The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)
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I can today confirm my Department’s intention not to appeal against the judgment of the Court of Appeal of 22 June 2020 in the case of Johnson, Woods, Barrett and Stewart v. the Secretary of State for Work and Pensions. The judgment relates to an appeal made in January 2019 by the Department against the High Court decision.

As we told the court, identifying claimants is hard; it is a difficult issue. To date, we are aware of around 1,000 claimants who have disputed their earnings and fall within the relevant cohort. We are looking at how we can further identify people in this group. I stress that many people affected by two salary payments will not suffer a financial loss, as their universal credit award will increase in the following month to balance the reduction. However, we do recognise the budgeting issues that may have been caused, and we are now assessing the remedial options. That is not straightforward—it is not the simple click of a switch—particularly at a time when the Department is focused on meeting the challenges of unprecedented demand for its services.

I hope Members will appreciate that as the judgment was passed down on Monday, it would be remiss not to afford more consideration before we press on, particularly when the Court has not called for immediate action. We will now begin the process of carefully considering possible solutions, and we will keep the House updated as progress is made. There are, however, immediate actions that can be taken. We are already working closely with Her Majesty’s Revenue and Customs to work with employers on how to report their employees’ earnings correctly. HMRC has issued updated guidance for employers which, if followed correctly, will further reduce the small numbers affected.

Stephen Timms Portrait Stephen Timms
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Thank you very much, Mr Speaker, for granting this urgent question.

If a universal credit claimant is in work and is paid monthly, but those monthly payments do not align precisely with universal credit months—for example, if the claimant works for the NHS and gets paid on the last day of every month—that claimant will, from time to time, be paid twice in a single universal credit month. The universal credit computer system treats that claimant as if they had had a 100% pay rise; their benefit is cut, quite likely to zero; they have to reapply for the benefit; and their income is severely disrupted.

One of those involved in this case says that she was more financially stable out of work than in work. Another turned down an NHS job for which she was expertly qualified because she knew that universal credit would wreck her finances. Surely, nobody will dispute the view of the Appeal Court that the policy is “irrational”. I am grateful that the Minister has accepted the inevitable and is not going to be paying out for even more expensive lawyers to appeal the case. Surely the Department should have given up the fight last year, not waited until the Appeal Court reached this conclusion.

May I ask the Minister to tell us more about how many people are affected? I think the Court heard figures of around 80,000. It is a very significant problem for a lot of claimants. In his keeping the House updated—I am grateful to him for his assurance on that—will he tell us much more about the numbers who are affected, and will he fix the universal credit computer system as soon as possible?

Will Quince Portrait Will Quince
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I thank the right hon. Gentleman for his question and the constructive way in which he has put it. I will, of course, keep him updated as the Chairman of the Work and Pensions Committee as our work in this area progresses.

The case was before my time as a Minister, but several legal points were considered, and it was on only one of those points that the Department lost. We face and recognise the decision of the Court, and we recognise that some people may face budgeting difficulties. That is why we are working as quickly as we possibly can to identify the solutions and to address the matter in line with the court order.

The scope of this case is limited and we believe the cohort, as I briefly mentioned, to be in the region of 1,500, but I am looking to identify that claimant cohort very carefully. I understand that fewer than 1,000 UC claimants have notified us over the past 18 months that they may be affected by this, and it is important to keep that in the context of the 5.2 million claimants to universal credit.