Universal Credit Work Allowance

Tulip Siddiq Excerpts

Wednesday 6th January 2016 Commons Chamber

[Justin Tomlinson]

I will make a bit more progress and then take a few more interventions.

Finally, and importantly, we are increasing the childcare offering. Universal credit currently covers up to 70% of eligible childcare costs, but from April we will increase that to 85%. That will make a huge difference to people’s lives, with the increase worth up to £1,368 per year for every child. We are also doubling free childcare to 30 hours a week for working parents of three and four-year-olds, which is worth up to £5,000 per child per year to working parents. Tax-free childcare from early 2017 will give working parents who are not in receipt of universal credit or tax credits up to another £2,000 per child per year, or up to £4,000 for a disabled child. All those measures are designed to help families keep more of the money they earn and support them in work. Therefore, our combined package of measures will make a real difference to real people’s lives.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I wish briefly to divert the Minister’s attention to homelessness and, in particular, its rise in London. A network of charities have said that the rise is a result of not only the chronic housing shortage, but cuts to welfare reform and social security, particularly universal credit. I do not know now whether the Minister is aware that last year the level of homelessness rose to a point where 7,500 people were sleeping rough on the streets of London. Does he recognise that universal credit will exacerbate that problem? Can he say how the rolling out—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. An intervention has to be very short, and I think the Minister has got the gist of this one.

--- Later in debate ---

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I would like to start by reassuring the hon. Member for Gloucester (Richard Graham) that I think universal credit is a total and utter shambles. I invite him to my constituency to speak to my constituents who are claiming benefits, because all of them are already in work. Tax credits did not stop them from going to work; tax credits incentivised them to go to work. He needs to visit constituencies in London to find out the truth and to dispel the myth that people claiming benefits are just scroungers. They are working hard; it is just that work does not pay.

[Richard Graham]

I have never said and would never say, and I do not believe anyone in this House would say, that people who work or do not work are scroungers. That is way beyond what I was implying. Let me put the record straight.

[Tulip Siddiq]

The hon. Gentleman certainly implied that in my opinion.

In January 2012, a considerable period of time before I entered the House, I listened to the Secretary of State tell the House in departmental questions:

“Universal credit is on track and on budget.”

Several years later and several billions of pounds of expense to the taxpayer later, his claim that

“I am not complacent about delivery”—[Official Report, 23 January 2012; Vol. 539, c. 8.]—

has not stood the test of time. Millions of families across the country, and especially in my constituency of Hampstead and Kilburn, have faced periods of relentless anxiety over the future of their welfare support. The year 2015 did not bring any fresh hope.

The Work and Pensions Committee’s report in December revealed that the roll-out of universal credit, from Royal Assent to resolving the final outstanding legacy payments, could stretch beyond a decade. The Government promised that universal credit would reach 4.5 million people by the 2015 general election. This has not happened. The Secretary of State may be content for his Department to cruise through endless periods of trial and error, but the delays to the roll-out have been at a significant cost to the taxpayer, with the Major Projects Authority revealing an increase of £3 billion in the past two years. The bill now stands at a staggering £15.8 billion. If the Secretary of State truly understands the pressures faced by claimants, he will apologise for the years of anxiety his delays have subjected them to.

The autumn statement fundamentally contradicts the Secretary of State’s ridiculous claim on “The Andrew Marr Show” that “nobody loses a penny” through the changes. They also mark the end of the Chancellor’s ludicrous claim at the Conservative party conference that the Tories are the new workers’ party. Nothing could be further from the truth. Cuts to the work allowance are so severe they will mean that single people and couples with no dependent children will lose out the moment they start working. Just listen to the facts: the poorest 20% are on average set to lose between 6% and 8% of their income. Just listen to Paul Johnson, the director of the Institute for Fiscal Studies, who stated that 2.6 million families will on average be £1,600 a year worse off. Further to that—this point was made eloquently by my right hon. Friend the Member for East Ham (Stephen Timms)— we know that transitional protections for claimants moving from the old system to universal credit will provide only £200 million against a background of £3 billion of cuts. Transitional protections are dropped when a claimant’s circumstances change. We know that new claimants will have no protection whatever.

[Richard Graham]

Is the hon. Lady aware that the IFS has actually said that anyone transferring on to universal credit will be protected and will not be worse off in cash terms?

--- Later in debate ---

[Tulip Siddiq]

I have not seen that. What I have seen from the IFS is what I have just reiterated: it shows very clearly that 2.6 million working families will on average be £1,600 worse off. The hon. Gentleman just needs to look at the statistics for inner London constituencies to see that that will be true.

Given the prevalence of part-time, low-paid jobs created by the Government and the well-established impossibility of the so-called national living wage to mitigate cuts to the work allowance, the Secretary of State must update the House urgently on whether he stands by his claims that “nobody loses a penny” through these changes. We need a Government who work towards an economy where employers, city leaders and central Government work together to make sure that economic growth creates new opportunities and high quality jobs. Instead, the Government are embracing cuts that will simply worsen the bleak picture of deprivation that is rampant across the country, and especially in inner London constituencies. Earlier in the debate, I made a point about the rise of homelessness and I did not get an answer from the Minister. Does he acknowledge that the changes to welfare will increase the number of people sleeping rough on the streets of London?

As a London MP, I have real fears that the significant growth in homelessness and destitution in the capital will only be made worse by the changes to welfare. Independent analysis by the IFS and the Resolution Foundation, and the Select Committee’s report, all acknowledge the consequences of the cuts to work allowance on the lowest paid, when they are eventually signed up to receive universal credit. I have a real fear that the decisions being pushed through will ensure that many people in Hampstead and Kilburn, who are already making the choice between eating and putting on the heating, will reach breaking point. Some 8,000 of my constituents are expected to be on universal credit by the time it is rolled out properly. It is not too late for the Government to rethink the cuts to the work allowance if they have any ambition to increase earnings. Higher and more stable levels of pay are the only way to improve financial security and move people out of poverty for good.

We saw the Secretary of State celebrate in this House when the so-called national living wage was announced, but he must reflect on cheerleading in the face of the stark reality that Britain’s low and middle-income families stand to lose thousands of pounds under the flagship policy. I ask him to carefully reconsider where he thinks his legacy lies, and whether he wants to put low and middle-income families through this trial when universal credit is rolled out.