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Universal Credit

Volume 526: debated on Monday 28 March 2011

1. What assessment he has made of the potential effects on gender equality of the implementation of his proposals for universal credit. (49037)

Before I answer this question, I would like to take the opportunity to offer my condolences—and those, I hope, of the House—to my hon. Friend the Member for South East Cornwall (Sheryll Murray), who had tabled a question for today, but whose husband tragically died last week.

As set out in the equality impact assessment published earlier this month, the effect of the universal credit measures and the Welfare Reform Bill on gender equality are approximately equal; and universal credit will see significant improvements in incentives for both men and women to work. We expect the new system will be particularly helpful to lone parents, including those who are looking for work that will fit in with their children’s schooling.

Many working mothers in my constituency are concerned that the universal credit will mean the loss of their working tax credit and access to child care support. Will my right hon. Friend confirm that support for child care costs will be provided through an additional element as part of the universal credit?

That is absolutely what we plan to do. We will bring forward our proposals shortly. The idea is that the available money will continue to be used for child care support. We recognise how important child care is in helping parents, particularly lone parents, to fit in their obligations to work and to look after their children.

Witnesses to the Welfare Reform Public Bill Committee stated last week that incentives for second earners to move into paid employment would be reduced in many cases under universal credit. Will the Secretary of State tell us what assessment has been made of the impact of the universal credit proposals on second earners and on women’s economic independence?

Yes. The majority of existing and potential second earners will not, on the basis of the figures I have looked at, be affected by the reforms, because the household already has earnings that take them beyond the reach of the benefit system. Approximately—I stress this is an approximate figure—300,000 second earners may see a deterioration in the incentive to increase their hours, and it is possible that some second earners will choose—or may choose as a result of their home commitments—to reduce or rebalance their working hours or leave. However, universal credit will provide much better incentives for the first earner, giving a greater choice to the household about how it wishes to spread its income.

The Secretary of State told us on Thursday that the Government have not yet decided how to support child care costs in universal credit. Is he yet in a position to assure women with children that in the new system they will be better off in work—after child care costs have been taken into account?

We are going to bring forward our proposals. It is because we acknowledge the importance of this area that we want to get it right. We are going to consult and we want people to recognise their priorities and have the opportunity to decide with us what they think those are. It is our intention—this can be stated absolutely, because it is the purpose of universal credit—to ensure that people will always be better off in work than out of work.