Universal Credit (Liverpool)

Stephen Twigg Excerpts

Tuesday 11th September 2018 Westminster Hall

[Dan Carden]

I will come on to some of the case studies and personal stories that I have been told. Well-documented design flaws and unresolved administrative issues have seen tens of thousands of claimants plunged into debt arrears and reliance on food banks. My casework is already loaded with people who are struggling to make ends meet, and piling universal credit—a policy that Citizens Advice has called a “disaster waiting to happen”—on to an economic situation that is already bordering on crisis will lead to levels of hardship not seen in the city since the 1980s. This is the last chance to apply the brakes, stop the roll-out of universal credit, and fix the flaws in its design and delivery.

Universal credit lists its stated aims as: to improve work incentives, reduce poverty and simplify the benefit system, making it easier for people to understand, and easier and cheaper for staff to administer. Who could disagree with that? However, the National Audit Office found in June that:

“Universal Credit is failing to achieve its aims, and there is currently no evidence that it ever will.”

Worse still, the evidence on the ground in areas where full service universal credit has been rolled out is clear: not only is universal credit failing to meet its aims, but it is having the opposite effect. It is punishing those in work, exacerbating poverty, and creating an unwieldy, arduous and inefficient system that increases pressures on claimants and staff alike.

[Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)]

I congratulate my hon. Friend on securing the debate. One flaw in the system concerns the rigidity of the assessment period. I am in correspondence with the Minister of State for Employment on behalf of one of my constituents who is affected by the rule that means that if two sets of earnings are covered by one assessment period, the claimant will get nothing or a reduced amount for the next period. My constituent is already worrying about how she will afford Christmas. Surely that cannot be acceptable in this day and age.

[Dan Carden]

It is absolutely unacceptable, and Ministers know that the system has major structural problems. Payment of universal credit is 35 days in arrears, which results in the common requirement for an advance payment. One local member of Department for Work and Pensions staff called the five-week wait a “scandal in itself”, and in practice it can take up to 12 weeks before claimants are paid the correct amount. That staff member also told me that the so-called advance payments put claimants even further in debt, because future payments are reduced by up to 40% to claw the money back. That corresponds with data released by Citizens Advice, which shows that more than half its clients who receive universal credit were forced to borrow money while waiting for their first payment. Other problems include payment as a single lump sum, including housing costs, which causes households to choose between rent or food, especially at the outset of the claim.

There is also the online system. We know that 17% of people who earn less than £20,000 never use the internet—I have met people in that situation. One in five disabled people, and two in five of those with learning disabilities, do not have access to the internet, and the DWP’s own analysis shows that just under half of all claimants are unable to register their claim online. How have the Government prepared for the online roll-out in Liverpool? By closing four jobcentres—including two in my constituency—and eight across Merseyside, in the very areas where claimant rates are highest. It beggars belief to take away the very facilities that were established to support those seeking work.

Despite cuts, our local authority has set aside £50 million to protect the most vulnerable people. We have, I believe, one of the best benefit support services in the country, so that when people are in crisis, they can at least access emergency financial support such as discretionary housing payments, the mayoral hardship fund and crisis payments. Liverpool’s benefit maximisation scheme costs £3 million a year, and its specialist advisers last year helped to secure an extra £10.5 million for Liverpool’s families. No ring-fenced money has been provided by the Government for that—the money comes from general funds and reserves. In the last two years, £1 million has been spent topping up discretionary housing payments, and stopping countless people losing their homes before the roll-out of universal credit has even taken place.

Austerity has decimated our local council services, yet for years the local authority has acted as a sticking plaster for the worst effects of austerity. This autumn’s roll-out of universal credit is expected to rip that away, and I am told that it will simply no longer be able to cope. One problem is that the DWP does not currently share data with local authorities, which means that it is impossible to identify and support people with differing needs for support. It shifts the burden of responsibility on to vulnerable people to seek out support services themselves, and the tragic reality is that we simply will not find those people until it is too late—until they have lost their home, until they are on the streets, until we find them in A&E, or until they simply become one more suicide statistic.

We know that nearly three quarters of housing association tenants on universal credit are in debt, compared with less than a third of all other tenants. Riverside Housing Association told me:

“The time of planned rollout is particularly worrying as it comes ahead of Christmas, a time when historically our tenants often struggle financially due to the additional heating costs and the festive season—with debt and arrears increasing.”

The Trussell Trust reports that in the past year food bank referrals rose by 52% in areas where the full service of universal credit was introduced in the previous 12 months, compared with a 13% rise across the UK as a whole. North Liverpool Foodbank says that changes to benefits are the most common crisis suffered by families, and that is before the full service has been rolled out.

In the local private rented sector the situation is even more critical. I spoke to a letting agent based in my constituency who told me that 100% of the agency’s tenants who are on universal credit are now in rent arrears—every one of them. Letting agents complain of ongoing issues in securing direct payment of housing costs under universal credit, even when the tenant has given explicit consent. I was told that one tenant on live service universal credit was £700 in arrears and was moved on to direct payment; then, as soon as full service was rolled out in Bootle, a neighbouring constituency, the direct payments stopped again. The tenant is now £2,500 in arrears. The letting agency told me, as others have, that it is at the point of refusing universal credit claimants altogether.

I do not need a crystal ball to tell the Minister that if the roll-out continues and the Government press ahead, there will be even more people living on the streets. More than 90% of local authorities surveyed by Crisis said they expected the roll-out of universal credit to increase homelessness. Rough sleeping in England has already more than doubled under the present Government. Let us remember that the first claimants to move on to universal credit were single unemployed jobseekers—the so-called easy cases. This autumn people with much more complex circumstances will transfer on to the system. It is a sobering thought that the worst is yet to come. It is a scandal for Ministers to proceed when basic failures in the system have not been fixed.