Universal Credit and Working Tax Credits

Thérèse Coffey Excerpts

Wednesday 15th September 2021 Commons Chamber

[The Secretary of State for Work and Pensions (Dr Thérèse Coffey)]

Just this week, the official jobs statistics showed that more people are getting back into work and there is a record number of vacancies. That is a tribute to the British people and businesses. It shows that our plan for jobs is working. It shows that our comprehensive and unprecedented support for citizens and corporations as well as the NHS, in trying to protect lives and livelihoods, has worked. After the terrible personal and economic impact of covid, boosted by the successful vaccination roll-out, Britain is now rebounding.

It was right that we took prompt and decisive action to support our nation during this challenging time. We had the job retention scheme, the self-employment grants, the VAT changes, the business rates relief, the suspension of evictions for people and businesses who were renting—I could go on. We could only do that, though, because we went into the global pandemic with strong economic foundations built as a result of 10 years of Conservative measures to restore the nation’s finances after the financial crisis on Labour’s watch, when, memorably, there was no money left. Those measures included a sustained focus on supporting people to move into and progress in work through universal credit, with the highest level of employment ever seen in this country just before covid hit.

[Stephen Timms (East Ham) (Lab)]

If this cut goes ahead, with £20 a week taken off universal credit, it will reduce the support for an unemployed family to the lowest level as a proportion of average earnings at any time since the welfare state was established after the second world war. How can that possibly be justified?

[Dr Coffey]

As I will probably say a bit later as well, this was indeed a temporary uplift, recognising the financial impact on people newly unemployed and that the uplift would be somewhat of a cushion for their financial circumstances. However, do bear in mind all the other support that we have given to help families get back on their feet, all the other elements that we have used to help people manage the cost of living, as well as the extra welfare grants that we targeted specifically through local councils. They have all been actions to help people, and we are helping people back into work, and better-paid work.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Will the Secretary of State give way?

[Dr Coffey]

I am going to make a little more progress and then I will come to the hon. Gentleman.

Those foundations meant that we had the fiscal firepower and responsive welfare system to take decisive and unprecedented action in the face of the covid emergency. We delivered a package of over £400 billion to support the British people and businesses through the economic shock and injected over £7 billion extra into the welfare system, increasing local housing allowance rental support by nearly £1 billion, as well as over £400 million of targeted grants for local government to directly help the most disadvantaged and vulnerable families in local communities.

[Alan Brown]

If a constituent comes to my surgery saying that they cannot afford to eat and have to go to a food bank because of the removal of the uplift, does the Secretary of State think they will feel any better when I say, “It’s not a cut; it’s just the removal of a temporary uplift”? What does she say to constituents who are on universal credit for the first time? They will have no idea that this cut is coming.

[Dr Coffey]

We have communicated once already with recipients of the universal credit temporary uplift. That has already gone through. The second message is under way, and the third message will be done. I think that we have taken responsible action to make sure that people realise that this change is coming, but of course the hon. Gentleman’s constituent will still be engaging with their work coach about how we can perhaps help them into better-paid work than they had before.

[Hywel Williams (Arfon) (PC)]

The Secretary of State started by listing the support that this Government have given to businesses, and specifically small businesses, which are very important in my constituency. How can she justify taking £5 million out of the local economy in Arfon?

[Dr Coffey]

I would expect the hon. Gentleman to be welcoming the investment that we will be making in getting people not only into work but into better-paid work. I am sure that will have a direct impact on supporting the economy in his area.

[David Linden (Glasgow East) (SNP)]

Will the Secretary of State give way?

[Dr Coffey]

I have already given way a bit, so I will make some more progress.

Let us recognise that not everyone was fortunate enough to be furloughed; sadly, many people were made redundant. Fortunately, we had the universal credit system, and with the mass efforts of the great civil servants in my Department, we responded instantly to support the millions of people who turned to us for help. I will never tire of praising my Department for how we helped those at their lowest ebb. I know that that would simply not have been possible with the old benefits system. People would have been queuing round the block trying to get into jobcentres, especially in the middle of a lockdown. It may be an inconvenient truth for Opposition parties, which have constantly tried to demonise universal credit, but universal credit proved itself even more during the pandemic, showing that it worked both by design and in delivery.

[David Linden]

I, too, pay tribute to the civil servants and the work coaches in the Secretary of State’s Department. That is the point that I want to explore with her. We all understand that unemployment is yet to spike. We expect that there will be problems as a result of the furlough scheme ending. I think that is widely anticipated; indeed, the Government have gone around opening temporary jobcentres and appointing more work coaches until March next year. If the Government understand that unemployment is about to spike, why are they removing this uplift to universal credit right now?

[Dr Coffey]

Of course, we now have a record number of vacancies, but we are also about being ready and anticipating. The OBR forecast that there would be a significantly higher unemployment effect as a result of what happened, and it mattered that we had jobcentres and work coaches ready to help people with that. I hope that we can now make sure that our army of work coaches can continue to help just under 2 million people still looking for work to get into those 1 million vacancies, as well as their efforts to help people progress in work.

[Sir Desmond Swayne]

rose—

[James Cartlidge]

rose—

[Dr Coffey]

I give way to my honourable neighbour from Suffolk.

[James Cartlidge]

I am grateful to my right hon. Friend and neighbour, who is making an excellent speech. She is right to highlight the resilience of the universal credit system, but on the point that is made about taking money out of local economies, is that not an insult to John Maynard Keynes? Is it not a fact that if individuals get more hours and better-paid work, there will be more money going into their economies, and on a more sustainable basis?

[Dr Coffey]

I would not normally rely on John Maynard Keynes to help the cause, but undoubtedly, there is an element of investment; we are seeing plenty of investment by the Government in our economies and in businesses in support of that, not least the £650 billion programme announced by my right hon. Friends the Prime Minister and the Chancellor earlier this week, which we estimate will generate an extra 425,000 jobs just in the next few years. We want people to have more take-home pay. That is why we have pursued increases to the national living wage, which is now at 60% of median earnings. The intention is that it will reach 66% of median earnings before the end of this Parliament—and that is just the minimum. We want people to have high-skilled, high-paid jobs, and that is why our plan for jobs is all about helping people take advantage of the support that is there.

[Sir Desmond Swayne]

Spending £6 billion handing an uplift to all recipients of universal credit, irrespective of their circumstances, was never a targeted way of affecting those people who are most in need. That is why it was temporary. When the Secretary of State comes to the longer term, will she consider the taper and the way that childcare costs are met?

[Dr Coffey]

My right hon. Friend is right that it was quite a blunt way of quickly delivering instant support, particularly for those most financially impacted by covid, many of whom were made redundant for the first time in their lives. I am conscious that we have still more to do to try to make sure that people can keep more of what they earn. I also have strong views that we need to continue to try to make best use of the funding that goes into childcare. As my right hon. Friend will know, under universal credit 85% of childcare costs, worth up to £13,000 per family, can be reclaimed. That is higher than that possible under tax credits.

Coming back to universal credit, the point has been made by hon. Members across the House that it is a dynamic benefit. It supports people in work and out of work, which is exactly what it was designed to do. People are better off working than not working, unless they cannot work. That is why, automatically and instantaneously, when people started to see a change in their working patterns due to the covid pandemic, it responded to the needs of people already in the system. Those affected saw their universal credit payments rise straight away when they lost working hours or found themselves out of work completely. That is a key part of why the UC system is absolutely vital. I am pleased that the Opposition seem at least to have decided to drop their opposition to that, even if it is just to rebrand. Nevertheless, we decided to somewhat cushion the fall of people made redundant.

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

Does my right hon. Friend not agree that it would be quite nice if the Opposition actually came here and apologised for year after year, in Opposition day debate after Opposition day debate, spreading scare stories and terrifying the poorest and the most vulnerable in the country by telling them that universal credit would not work? When we were under the biggest strain this country has ever faced, universal credit worked. That is a testament to my right hon. Friend, her great Ministers and the thousands of DWP staff up and down the length and breadth of this country.

[Dr Coffey]

My hon. Friend is absolutely right. There are still 3 million people on legacy benefits. We estimate that about half of those people would be better off on universal credit and that a significant number of people would see no change, yet the scare stories and the fear that the Opposition generated are why people are still not transitioning across the system. They will do just that now, because this Parliament voted to end legacy benefits; it voted to have universal credit, so we are still, through our action programme, going to move people across to universal credit. I am with my hon. Friend that many people would actually and substantially be almost certainly better off if they moved. For those people, we have to have a managed migration. We have, of course, already put in place a transitional payment.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

The Secretary of State said a moment ago that we are spreading scare stories. Can I say to her—she may wish to comment on this—that talking about the very real impact of losing £20 per week for people who are already struggling is not a scare story, but reality?

[Dr Coffey]

I recognise what the hon. Lady says. I am talking about the fact that universal credit has been demonised ever since it was introduced, yet people on legacy benefits—about half of them, we believe—would be financially better off if they moved over to universal credit, regardless of the £20. A significant proportion more would see no change to their financial income. People are scared to move over and that is why there is a missed opportunity for them to access some of the support we have today.

[Several hon. Members rose—]

[Dr Coffey]

I am going to make some more progress and then I will come back to the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) and my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb).

Returning to the crux of the debate, the temporary £20 uplift was an important intervention to help people facing the greatest financial disruption to get the support they needed. It brought the universal credit standard allowance close to the level of statutory sick pay, the minimum amount required to be paid by employers for people who could not work.

In the Budget earlier this year, recognising that the country was still under restrictions, the Chancellor set out that we would continue covid financial support until autumn, several months after the country came out of lockdown. That helped many people stay on furlough and be connected to their employers as businesses gradually opened, and meant keeping that extra financial support for people on universal credit and tax credits for an extra six months. As our economy continues to recover, it is right that we are investing in jobs and skills to boost pay, prospects and prosperity for people right across the UK as part of our plan to level up and build back better.

[Stephen Crabb]

On universal credit, I have spoken to dozens and dozens of work coaches all over the country. Every single one of them has told me, without a shadow of a doubt, that universal credit is a better benefit than what was before. It is down to the enthusiasm and the skills of work coaches, to a large extent, that universal credit has been such a success during this very difficult period.

[Dr Coffey]

My right hon. Friend is absolutely right. We already had about 640 jobcentres. We are opening a further 200 by the end of the year, recognising that we need to support more people. Of course, work coaches do not just deal with helping people—people with disabilities and a limited capability to work—to get back into work. Work coaches do a wide variety of work to support some of the most disadvantaged and vulnerable. Again, I thank him for paying tribute to our work coaches. They will play a key role in the time ahead. Perhaps the hon. Member for Oldham East and Saddleworth would like to intervene now?

[Debbie Abrahams]

I would be delighted to, although it is not specifically on work coaches. The right hon. Lady is absolutely right that there are winners and losers with universal credit. Last week, the Select Committee heard from four single parents about how they are the losers. I would add that disabled people are also losers. What is the cumulative impact of the cuts to universal credit, the introduction of the new national insurance contributions payment, the rise in food prices and energy bills, and the childcare costs which we have already heard about? What would the impact be on a single parent with two children living on the minimum wage with support from universal credit?

[Dr Coffey]

The hon. Lady will know that every individual or household on universal credit has very distinct relationships, which is why we can find households earning up to nearly £40,000 still being recipients of universal credit. It depends on the circumstances. As the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Colchester (Will Quince) said the other day, trying to do some kind of analysis by trying to make individual assessments is just not viable. However, we know, and she knows—

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

Will the Secretary of State give way?

--- Later in debate ---

[Dr Coffey]

I will give way to the former Secretary of State for Work and Pensions shortly. The hon. Member for Oldham East and Saddleworth must agree with me that the best way to get more pounds into people’s pockets is through work. We have universal credit work allowances for people with children—this may have covered some of the people who gave evidence to the Select Committee—who have a limited capability to work, so they can keep all the extra money they earn until the allowance is used up and the taper rate kicks in. That is why we have given extra support for people who may not currently be working full time. That is an extra way for them to get all the money they earn for more hours.

[Yvette Cooper]

I thank the Secretary of State for giving way. A care worker or a low-paid public sector worker—for example, a nursery assistant—who works full time, loves their job and has no prospect of a pay raise any time soon, is now about to be told that they will have £20 a week taken away from them. What does she say to those care workers about why that is fair?

[Dr Coffey]

The right hon. Lady is right to praise care workers, who played an important part during the covid pandemic. It is my understanding that half a billion pounds of the health and social care levy, which was passed yesterday—the Opposition voted against it—will go to supporting the workforce in the care industry, recognising aspects of skills and pay. I want to put across to the right hon. Lady that we know—there is evidence on this—that where both parents are working full time, 97% of those households are not technically in poverty. That is why we have such emphasis. Households with children working part time are more likely—substantially higher, closer to 42%—to be in poverty. Frankly, five times the rate of people who do not work at all—workless households—are in poverty compared to those who are working. That is why we have worked really hard to reduce the number of workless households. I think there are 650,000 fewer workless households, lifting children out of poverty.

[Rachael Maskell]

Will the Secretary of State give way?

[Dr Coffey]

I will make some progress if the hon. Lady will allow.

We know that the best way to get more pounds into people’s pockets is through work. Those of us on the Conservative Benches believe in a welfare safety net, not a welfare trap, where it feels the Opposition are keen to keep people. We know that work and progressing in a job is the best route out of poverty, and I have spoken about parents working full time. That is why the Government, having provided unprecedented support during the height of the pandemic, are now right to focus on helping people back into work and helping those already in jobs to progress in their career.

Although the legacy benefits system penalised people for taking on more hours, universal credit ensures that working always pays. We got rid of the cliff edge that was part of working tax credits where people were penalised for working more than 16 hours and of the other cliff edges. I repeat that that is why we have UC work allowances focused on people with children or with limited capability to work, so that they can keep all the extra money that they earn until the allowance is used.

[Rachael Maskell]

I am grateful to the right hon. Lady for giving way. She says that universal credit is responsive, but when she announced this cut, we did not know that there would be a 3.2% increase in inflation. My constituents are in work; it is just that the cost of living in York is exceedingly high. This proposal will hit them significantly, so will she take it back and reconsider in the light of inflation rising?

[Dr Coffey]

The hon. Lady represents a beautiful city—a magnificent city—and she will know that the jobcentre and our work coaches are working hard there with the communities. In lifting the local housing allowance rates, we made nearly a £1 billion investment, and we have maintained that in cash terms to recognise some of the costs of housing, which are truly challenging in very popular areas such as hers, and I am sure that she will welcome that.

We are making the most of our 13,500 extra work coaches. Right across the country, we have doubled our jobs army, which is helping people to get into work and to progress in work by accessing skills and job schemes. Our plan for jobs employment programmes are providing tailored support to help more people to move into and progress in work.

[Andy Carter]

Last week, I visited the jobcentre in Warrington and saw for myself the work that the new job coaches are doing, particularly with young people. Does the Secretary of State agree that we need to focus on young people and that that is exactly the work that the kickstart programme is doing?

[Dr Coffey]

I agree. Kickstart has so far given over 69,000 young people a foot in the door as they start their working lives. There are more jobs to be filled and we are working with employers to accelerate the recruitment process in that regard.

We also have a scheme called SWAP—the sector-based work academy programme—where people might consider changing their career. The beauty of SWAP is that it is employer-led. We have helped 64,500 people gain the skills that they need to land a job in a whole range of growing sectors. At the end of the training and work experience, there is a guaranteed job interview.

[Dame Angela Eagle]

Will the Secretary of State give way?

[Dr Coffey]

I will make some progress and then come back to the hon. Lady. We also have the job entry targeted support scheme, which, again, provides tailored support, and 138,000 newly unemployed people have got a leg up that way to make sure that they can try to find sustainable work. The restart scheme has recently started. That will provide intensive help, supporting over 1 million jobseekers who have been out of work for over a year. That is not all, but I will give way to the hon. Lady.

[Dame Angela Eagle]

I thank the Secretary of State for giving way. Will she explain to the House why, if everything is reasonable and as it should be, her six predecessor Conservative Secretaries of State for the Department for Work and Pensions have all come out against this cut?

[Dr Coffey]

I think it is fair to say that in the letter I saw that my six predecessors had signed—they are magnificent people and it is an honour to follow in their footsteps—they were keen to have the extra financial support that has gone into aspects of the welfare system and to help people in that way. It was not specifically about the £20 but about recognising, as has been said today, that there may be better ways of using that financing. I am conscious that the media may have reported that in a slightly different way and I am not going to put anybody on the spot. However, I think they valued the extra money that went in, and I want to continue to support people.

[Stephen Crabb]

Will the Secretary of State give way?

[Dr Coffey]

I will give way to my right hon. Friend, one of the co-authors, but I am conscious that the universal support, alongside universal credit, was a key element of their request.

[Stephen Crabb]

I am grateful to my right hon. Friend for giving way again; she is being incredibly generous with her time this afternoon. The central argument of the letter that we sent to the Secretary of State and other colleagues in Government was about trying to retain the investment in universal credit. There are different ways to spend that money. All the evidence that I have seen suggests that investing in the standard allowance gives us more bang for our buck in protecting families against poverty. It was really a last-ditch attempt by me and a number of my colleagues who had served in that Department to persuade the Government to hang on to the crucial extra investment that had been put in at the start of the pandemic and which has made such a powerful difference to so many poor families up and down the country over the last 18 months.

[Dr Coffey]

I thank my right hon. Friend. Anybody who has served in this office, including the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), will recognise, for the people we meet daily, as other hon. Members do in their constituencies, what a difference an intervention from a work coach or a decision maker can make to really boost people when they are at their lowest ebb. I do not know whether any hon. Members watched the series “The Yorkshire Jobcentre” on Channel 4. Our social justice team there go above and beyond in trying to help people who have been rejected by the rest of society to get their lives back on track. That is the sort of work we can do. I understand why my right hon. Friend is keen for the welfare budget to still be substantial in supporting such people.

[Dr Caroline Johnson (Sleaford and North Hykeham) (Con)]

My right hon. Friend is being very generous with her time. She has been talking about work coaches and how these fantastic people can support people into work and the different people they help. Will she tell the House more about how work coaches and universal credit are helping disabled people back into work?

[Dr Coffey]

I will. I am pleased to say that I think there are more people with disabilities in work at the end of the pandemic than there were at the beginning. There is a number of things and I encourage my hon. Friend to read the Green Paper on what we have set out as possible ways forward. We want to make elements such as the Access to Work programme work better in terms of potentially being transferrable. In particular, we have some specialist schemes that we target on people with disabilities, and particular efforts are being made to help people with disabilities to access kickstart. We will continue to try to support people with disabilities to make the most of their potential, as we set out in our broader approach in the national disability strategy.

[Alex Cunningham]

Will the Secretary of State give way?

[Dr Coffey]

I will not, because I am conscious that we are nearly an hour into this debate and many hon. Members will want to speak about this important matter.

Right across Government, we are investing to help people to get better-paid jobs, whether that is through digital boot camps, the lifetime skills guarantee, the £650 billion infrastructure programme that will generate 425,000 jobs, the £8.7 billion affordable homes programme expected to support up to 370,000 jobs, and the green jobs taskforce, which goes from strength to strength as we work our way towards net zero. I have referred to the extra funding through the health and social care levy, which will include support for care workers, but we will not stop as we help people to progress in work. This Conservative Government and Conservative party want people to prosper as we build back better and level up opportunity across the country.

Tackling poverty through boosting income is one element and we will continue to support people with the cost of living. We have kept the uplift in housing support through the local housing allowance rates, as I mentioned to the hon. Member for York Central (Rachael Maskell), maintaining it in cash terms this financial year. We spend over £6 billion on supporting childcare, which is equivalent overall to about £5,000 per family. As I said to the House, that can be up to £13,000 per family for people on universal credit.

We have increased the automation of matching benefit recipients with energy suppliers to make it easier for the warm home discount to be awarded almost automatically. I was very pleased to see that more mobile and broadband suppliers stepped forward with social tariffs for people, which is why I am delighted to let the House know that we are working with those suppliers to make it easier for them to verify the identity of people seeking those special discounts. I am also leading cross-Government action to do more on tackling poverty and the cost of living, which will help many families with their day-to-day costs.

We have heard that universal credit is flexible and that people are treated individually. I am very aware of the challenges on food insecurity. That is why we included the questions we did in the family resources survey so that we can start to think about how we can direct our policies specifically to those people. As my hon. Friend the Member for South West Hertfordshire (Mr Mohindra) was trying to get out of the shadow Secretary of State, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), what is accurate—I am pretty sure to say—is that, in 2008, tax credits may have changed, but that was effectively for people in work. What we did not see was a boost in the unemployment benefits, so when the shadow Secretary of State criticises us for putting an extra £20 a week in the pockets of people who were newly unemployed, I do not think that his assertion is defensible.

One thing that the House may see in a couple of years is that, although in the last year of the last Labour Government we saw a reduction in relative poverty, that was largely driven by the fact that higher-paid people were unemployed—we saw a shrink in relative poverty simply because of a statistical anomaly. We have to deal with real-world facts and make sure that the provision of cash, by helping people with their income, is really the way to help them to get on in work but also to help them with the cost of living.

[Jonathan Reynolds]

It is incredibly generous of the Secretary of State to take an intervention from me on the Front Bench, but if relative poverty is what we are measuring—although Conservative MPs have broadly run away from that measure since saying that they would accept it—I have to say that child poverty in the UK is heading towards 5 million under this Government.

If the Secretary of State wants a discussion about the legacy of 2008, rather than about what is happening today, let me say first that benefits had not been frozen for four years under the Labour Government, so they kept their real-terms value. Secondly, the Secretary of State says that she has put more money into the system, but take the money for housing that she mentioned on Monday. That was not more generosity; it was not a boost; it was funding the level of policy that the Government already had with the 30th percentile. They were not improving on it; they were simply putting in the money that should have been there from the beginning. That is the crucial difference.

[Dr Coffey]

The last Labour Government—admittedly that was quite a long time ago and many Members of this House will not have been serving here then—did not build enough homes. Prices were not tackled, money was not well spent and we were left with no money.

The shadow Secretary of State will be aware that I am not a fan of talking about relative poverty, because it is simply a statistical element. However, since 2010, there have been 60,000 fewer children in absolute poverty before housing costs. Children living in workless households were around five times more likely to be in absolute poverty last year than those in households in which all adults worked. We know that full-time work reduces the chance of being in poverty. Overall, there are also 220,000 fewer pensioners in absolute poverty.

[Laura Trott (Sevenoaks) (Con)]

When we talk about the legacy of the last Labour Government, we must never forget the sky-high rates of youth unemployment that we inherited from them. Will my right hon. Friend commit to carrying on the brilliant work that she has done to reduce youth unemployment in the midst of this crisis?

[Dr Coffey]

My hon. Friend will be conscious that we are making progress right across the country in tackling that issue. I am conscious that we intend to level up. That is why we are doing a lot of work to make sure that communities right around the country, as well as in her great constituency of Sevenoaks, can take advantage of the schemes so that they can get on and prosper.

With the economy rebounding, now is the time to trust in our track record, which delivered the highest ever employment levels before the pandemic. We know that work and progressing in work are the best route out of poverty. We now have a unique opportunity, with more than 1 million vacancies in the labour market, to help people to move into new and better-paid jobs or to progress in their existing job, raising their earnings and building their financial resilience. We will continue to deliver our plan for jobs, because as we build back better and fairer, a working Britain is at the heart of a Britain that works.

[Several hon. Members rose—]