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Universal Credit

Volume 553: debated on Thursday 22 November 2012

I inform the House that by convention only Dame Anne Begg will speak in this debate. Interventions are allowed, but no other speeches.

I beg to move,

That this House has considered the matter of the publication of the Third Report from the Work and Pensions Committee, on Universal Credit implementation: meeting the needs of vulnerable claimants, HC 576.

Today the Work and Pensions Committee published a report, “Universal credit implementation: meeting the needs of vulnerable claimants”. Universal credit is a new working-age benefit that, if the various IT systems work—fingers crossed—should be easy to operate for the majority of claimants. Almost all our witnesses supported the principles of universal credit, but as we took evidence it became clear that there were concerns about how those who will find the new system difficult are to be helped. That explains the title of our report. The Government’s approach is to design a system that works for the majority before they then assess what additional support more vulnerable claimants might need. However, we have significant concerns that insufficient progress has been made in deciding what the additional support will offer, how it will be delivered, and who will qualify for it. There is therefore a risk that this help will not be in place for the implementation of universal credit in the first pathfinder areas from April next year.

The report highlights several areas of concern. First, “digital by default”, as the Government call it, means, in effect, that all claims and all changes in circumstances will have to be submitted online, which might cause problems for a sizeable minority of people. On the single monthly payment per household, we are concerned about who within the household will be the recipient. We are worried about potential delays in the system that could mean not only that one benefit is delayed but that all moneys that are due to go into the household are stopped for one reason or another. Another concern is that under universal credit the housing costs of someone in social housing will no longer be paid directly to the landlord but will be part of the single monthly payment.

The Government’s emphasis on planning for the majority means that that is where all the work has been done. There has not been enough detail on the so-called exceptions policy and on how people who are not managing—those who are not in the majority—will be picked up.

I thank my hon. Friend for presenting this very important report. I think she will agree that one of the Committee’s major concerns was that the concept of exceptions—people who might get additional help or assistance, or who might not be subject to the monthly payment rule—was very unworked-out. It would be helpful to get some of the detail so that these things are anticipated rather than dealt with once people have got into trouble.

Indeed. We hope that in response to our report the Government will give more detail—put more flesh on the bones—on exactly how the exceptions service will work and how it will identify vulnerable people. I will have a bit more to say about that later.

Another area of concern is the ambitious implementation timetable. We think that there is a danger that the Government have a degree of blind faith in thinking that all the IT systems will work. We would love to share their feeling that everything is all right, but we have seen in the past how other Government IT systems have not lived up to expectations.

Did the Committee note the concern of the Federation of Small Businesses that only a quarter of small businesses are aware of the need to provide real-time information to Her Majesty’s Revenue and Customs? What did the Committee recommend as regards those communications?

We heard a lot of evidence from members of employers’ organisations and from organisations representing accountants, and others, who were concerned about HMRC’s real-time information requirements, on which the system strongly depends. They felt that there was not enough knowledge among employers who will have to operate the process. One of our recommendations was that the Government should be liaising more closely with those organisations and helping with publicity. Another recommendation was that the Government should be wary of trying to keep to the ambitious timetable that has been set.

The Committee has two other areas of concern. First, there are still decisions to be made about how to deal with passported benefits. Secondly, the decision to localise council tax benefit seems to fly completely in the face of the basic principles of universal credit. That might create extra computer problems, because the Department for Work and Pensions’ computer system would have to interface not only with the HMRC’s computer systems but those of local authorities.

Let me look at these matters in a bit more detail. “Digital by default” sounds great in theory, but it might be more difficult to manage in practice because the number of people likely to be applying for universal credit who do not have access to a computer or are not digitally aware or computer literate will be much higher than in the general population. We are keen that the Government should lay out exactly what will happen in the case of claimants who are unable to make any kind of digital claim, because we understand that there will not be a paper form. Indeed, the Government expect that only 50% of claimants will make their claim online in 2013, when universal credit starts to be rolled out.

I congratulate the hon. Lady on her speech. Does she agree, though, that many people find the existing multiple claims processes very difficult to deal with and get right? Does she also agree that there are advantages to people using computers and becoming familiar with the internet because it will help them to get into work, where they may well be expected to do those things?

As we say in the report, it will not be a problem for the majority of people, but it will be for some. We must remember that the people who will get universal credit are not just run-of-the-mill out-of-work claimants; some will have very severe disabilities because employment and support allowance is part of the new system. Some people will have quite profound barriers to accessing benefits of any kind on the internet. We hope that they will have help, but it would be useful for the Government to spell out in more detail exactly how that help will be accessed.

I am delighted to have joined the Select Committee, albeit after the evidence for this report was taken. When the Committee reviewed the draft report, we discussed the issue that many of those who may struggle are the very people who struggle at the moment. It is important that we do not suggest that universal credit will be the source of the problem, because some of the same people struggle now. As my hon. Friend the Member for Amber Valley (Nigel Mills) said, there are opportunities in going digital such as having translation online and different ways of presenting information. A mass of paper is often more confusing.

Indeed, but a large number of our witnesses said that there are people who are managing in the present system who will not necessarily manage under the new system. Somebody who is struggling at the moment with a paper form will almost definitely struggle with an online form, but there are people who can manage a paper form who will not be able to manage an online form.

As housing benefit will go not to the landlord but to the individual, there are other groups that the current system supports who might have difficulties managing under universal credit.

Given the difficulty that many people have accessing applications through IT, does my hon. Friend recognise that this change will lead to a massive surge in demand for the help of advice centres? Does she have any thoughts on the additional support that such centres will require to help those people?

Indeed, the report makes a strong recommendation on ensuring sufficient funds to support Citizens Advice and other advice and welfare rights groups. When they appeared before us, Ministers promised that there would be additional resources for such organisations. There is a recognition that that there will be difficulties, certainly with initial claims and when people move on to universal credit. It would be foolhardy of the Government to say that there will be no difficulties, and I do not think that they are saying that. There are bound to be difficulties, and that is where such organisations have an important role.

Is my hon. Friend aware that only on Friday Ofcom published new statistics showing that 10% of the population simply have no access to broadband?

I thought that the figure was 20%, but perhaps the hon. Lady has given a more recent figure than the one that was available when we wrote the report. There is no doubt that there will be challenges for people because of “digital by default”.

I entirely take on board the point about the lack of digital access for certain people. That is a problem across a range of Government services, and not just in this area. Does she agree that moving away from multiple applications for a large swathe of different benefits will provide a benefit, for want of a better word? I am sure that, like me, she is visited by many constituents who simply do not know what benefits they are entitled to and are not claiming them. Universal benefit should help to prevent that.

That is why most of our witnesses supported the basic principles of universal credit. I do not like to say that it will simplify the benefits system, because I do not think there is such a thing as a simple benefits system, but it will be more coherent, transparent and understandable.

However, there is an inherent problem in the single payment. At the moment, if somebody makes a mistake in their housing benefit claim, only their housing benefit is affected, and if they make a mistake in their child tax credit claim, only that tax credit is affected. As universal credit will be a single benefit that is paid in a single monthly payment to each household, if one of those things goes wrong for one reason or another, it could mean that a family’s whole income is withheld. That is why it is a real challenge for the Government to get it right. It might mean that some individuals and households do not get their benefit at all. By the time that is picked up, it might be too late. The concern is over how quickly such people can be helped and how quickly they will be able to access the system. One of our key recommendations is about the speed of that identification.

I notice from the report that the Committee is keen to ensure that there is digital access via smartphones. I believe that the Government are looking at that idea very carefully and will implement it. I imagine that the hon. Lady will welcome the idea that people will be able to check their real-time universal credit status when they are out on the street or on the move, and will thus have a much better idea of what they can and cannot do when out shopping or transacting in any way.

Ministers’ responses suggest that the smartphone technology may be some way off. There are issues with the security of the data. We have had some assurances from the Government on that. This is such a big reform that we could not, in our short inquiry, look in detail at all of these matters and their implications. That is the challenge for the Government.

On the implementation timetable, the Government have made great play of saying that there will not be a big-bang effect, because universal credit will not come in for everybody on one day, but will have a slow roll-out. In the pathfinders that will operate from next April, it will be the easy claimants that are seen to first, such as single people who are on jobseeker’s allowance. However, people’s circumstances change, so it is imperative that the Government can foresee how universal credit will work in all circumstances for it to work even in the first cases. It will be no comfort to a claimant who receives no benefit in 2013 because there are failures in the system or because it cannot cope with their change of circumstances for the Government to say that the problems will be sorted out by 2017. For each family, there will effectively be a big bang when they make a new claim or when they move on to universal credit. We are hopeful that the Government are alert to those concerns.

While there is cautious hope that the IT systems will work, the report acknowledges that if they do work, particularly the real-time information element, it will alleviate many of the problems that we see in our surgeries, such as when people forget to report changes in their circumstances and end up with enormous arrears. That is a particular problem with tax credits. There is therefore the potential to solve one of the biggest problems that affects many of our constituencies.

As the hon. Lady said, that is all dependent on the IT. A lot of what we are talking about is dependent on the IT. That brings me on to my next point.

We were not persuaded by the assurances from HMRC that everything would be fine. We were concerned that there appeared to be no proper contingency planning for where the IT does not work as expected or at all. The points that we make in the report are based on the premise that it will work. Our concerns therefore come on top of any problems that might arise because of the IT.

The report expresses concerns about the additional costs of disability. Ministers have told us that the total expenditure on disabled people as a whole will not be reduced under universal credit, but we are concerned about individual disabled people whose entitlement will be reduced. Existing claimants will obviously have transitional protection, so they will not lose out in cash terms immediately, but that protection will erode over time and will be lost if their circumstances change.

Was the Committee concerned that the protection for existing claimants, which means that they will not lose out unless there is a change in their circumstances, might act as a disincentive to enter into work, because they might worry that the job will not work out and that they will have to go on to universal credit for the first time, which could mean receiving a lower payment than they had previously?

A number of witnesses pointed out to the Committee that there can sometimes be unintended consequences and that people’s behaviour does not always follow a logical pattern. What my hon. Friend has said might be logical in certain cases.

Many decisions must still be made on passported benefits. The Committee acknowledges that it is a difficult issue, but it is essential for the Government to make a decision. A lot of working families depend on passported benefits, and that is one of the elements that will make work pay. I do not have time to consider in detail the localisation of council tax, although I have a feeling that Ministers in the Department for Work and Pensions might share a few of the Labour party’s views on that, even if they do not say so publicly.

The concerns set out in the report about the impact of universal credit on vulnerable claimants are significant and should give the Government cause to reflect on the speed at which they plan to proceed. This is an important reform for the Government, who have been willing to go where no other Government have feared to tread. Many have described it as a brave, radical step that should provide a more coherent and transparent benefit system for working-age people. It is therefore important that the Government get the implementation right, and ensure from the start that all 8 million households affected by the reform will be able to access the help they might need to make a claim. The success of universal credit will be judged not on how well it works for those able to manage it, but on how well it serves the most vulnerable in society.

Question put and agreed to.