I beg to move,
That this House has considered the roll-out of universal credit.
It is a pleasure to serve under your chairmanship, Mr Davies, not least because I have been attempting to hold a debate on this issue for several weeks, if not months, because of the sheer volume of universal credit-related problems raised with me by constituents. I originally secured the debate for 22 March, but it was understandably cut short following the appalling attack on Westminster that afternoon, so I would like to take this opportunity to place on the record my eternal gratitude for the selfless and incredible bravery of PC Keith Palmer on that day. My thoughts very much remain with his family and with the families of those from around the world who were killed or injured as a result of that sickening incident.
Before I expose the myriad issues that my constituents have faced in dealing with this Government policy, and at the risk of repeating what I said on 22 March, I want to set out the context for this debate. As all hon. Members are aware, universal credit is a new benefit that is being introduced to replace means-tested social security benefits and tax credits for working-age individuals and families, including working tax credit, child tax credit, income-based jobseeker’s allowance, income support, income-related employment and support allowance, and housing benefit. According to the Government, the aim of universal credit, using real-time information on claimants’ circumstances, is
“to simplify and streamline the benefits system for claimants and administrators, to improve work incentives, to tackle poverty among low income families, and to reduce the scope for fraud and error.”
Following years of repeated delays and false starts, the infamous reset in 2013 after the Major Projects Authority told the Government to go back to the drawing board, and concerns expressed by the National Audit Office that delivery of universal credit had been beset by
“weak management, ineffective control and poor governance”,
the new benefit is finally, but very painfully, being rolled out across the country. As the Library briefing note helpfully produced for the debate highlights, since the 2013 reset, the Department for Work and Pensions has been developing and rolling out universal credit using a twin-track approach. The briefing note states:
“This involves rolling out Universal Credit using IT systems developed prior to the 2013 reset (the ‘Live Service’) while, simultaneously, DWP develops the Digital Service (now known as the ‘Full Service’) from which Universal Credit will eventually be operated”—
I hope everyone is still following me. That means that, since spring 2016, universal credit has been available in all jobcentres across the country, but in most areas it is available only for new claims from people with relatively simple circumstances—single unemployed people, or people with very low earnings, who satisfy the gateway conditions. In the small but increasing number of areas that have full service universal credit, all new eligible claimants will receive universal credit, as will existing claimants of legacy benefits who report a change in their circumstances that results in their being “naturally migrated” to universal credit.
Following the “reshaping” of the next phase of universal credit’s roll-out announced in a written statement on 20 July 2016, the Secretary of State confirmed that the DWP intended to continue the roll-out of full service universal credit to five jobcentres a month until June 2017 and expand that to 30 a month from July 2017. There will be a break over the summer of 2017. The Government hope to scale up full service roll-out to 55 jobcentres a month between October and December 2017 and accelerate that to 65 a month by February 2018, with roll-out to the final 57 being completed in September 2018.
As a consequence, under the Government’s current plans, universal credit should be available across the country to all new claimants and existing claimants with changed circumstances by September 2018, and the final stage of the roll-out of universal credit, the “managed migration” of existing benefit claimants with no change in their circumstances, will commence in July 2019 and be completed by March 2022—some five years later than the original target. Quite how that complicated timetable now fits alongside the DWP’s proposals, published in January, to close an estimated one in 10 jobcentres and merge or co-locate many others is something on which it would be helpful to receive confirmation from the Minister when he responds to the debate.
It is clear that the roll-out of universal credit is a hugely complex task and that hard-working jobcentre staff are being placed in an incredibly challenging situation. The Library briefing note states that it involves
“not simply the creation of a new benefit but development of entirely new administrative systems to support it. This includes development of the Digital Service, the online IT system via which claimants and DWP will manage awards, and training staff to administer a new conditionality and sanctions regime that imposes requirements on in-work as well as out-of-work claimants.”
As universal credit requires a broader span of people to look for work than is the case with legacy benefits—for example, by including those in receipt of housing benefit or child tax credits and, indeed, the partners of universal credit claimants—there has been a marked effect on the claimant count in areas that have full service universal credit. In the year to January 2017, there was a 25.5% increase in the claimant count in full service areas, compared with an increase of 0.1% across the UK as a whole.
There are numerous concerns about the impact of universal credit on existing claimants, particularly families with disabled children whose caring responsibilities prevent them from working. The charity Contact a Family estimates that those families could be up to £1,600 a year worse off after being transferred to universal credit. We also still have the disturbing two-child limit for the child element of universal credit for all families making a new claim, regardless of when their third child was born, and the totally unacceptable situation in which women will be forced to prove that any third child was born as a result of rape. Serious concerns remain about the cuts to work allowances introduced from April 2016 for universal credit claimants. The Children’s Society highlights that they mean that
“Universal Credit support for most working families was considerably reduced”.
The Government have pressed ahead with their potentially deeply damaging decision to remove entitlement to the housing benefit element of universal credit for 18 to 21-year-olds, subject to certain exemptions—a move that has been roundly condemned by homelessness charities including Centrepoint and Crisis. Meanwhile, organisations including the Federation of Small Businesses and the Low Incomes Tax Reform Group are pressing the Government to think again about the minimum income floor, given its potential impact on many genuinely self-employed people with incomes that fluctuate from month to month.
There is, of course, the fact that the change in the universal credit taper rate from 65% to 63%, as announced in the 2016 autumn statement, does not come close to outweighing the cuts to work allowances. The general secretary of the Union of Shop, Distributive and Allied Workers recently commented:
“The very modest reduction in the high clawback rate of 65% of net earnings to 63% is a tiny step in the right direction, but is worth less than £300 for most working parents. It goes nowhere near offsetting the enormous £2,000 to £3,000 annual cuts that Universal Credit represents or taking the taper back to the 55% rate that was originally intended. Universal Credit is a ticking time bomb that will plunge far more working families into poverty, when they are transferred on to it. We supported the initial intentions of Universal Credit, to simplify benefits and improve incentives to work. However, severe cost cutting has turned Universal Credit into a real threat to the incomes of low-paid working families.”
I thank my hon. Friend and neighbour for securing this important debate and for ensuring that it took place today. She knows that I have raised the issue of the increase in housing debt for those on universal credit, and that in Newcastle the proportion of tenants in debt has increased greatly. The Minister said that that increase had not actually occurred; however, I have figures showing that the average debt for non-universal credit tenants in council housing is £300, whereas for universal credit tenants it is £636. Does my hon. Friend agree that that is a huge increase for working and non-working families?
I thank my hon. Friend and constituency neighbour for her insightful intervention, which highlights one of the major issues caused by the roll-out of universal credit when combined with the impact of the cuts agenda. This is a ticking time bomb and it is of particular concern to areas such as ours—Newcastle—given recent analysis by the TUC highlighting that while employment in the north-east grew by 60,000 between 2011 and 2016, a staggering 40,000 of those new jobs were without guaranteed hours or baseline employment rights. That means that some 124,000 people in our region—the equivalent of one in nine workers—now work in insecure jobs. Given that the north-east has the highest rate of insecure employment of anywhere in the UK, those people need a universal credit system that functions.
That leads me to the reason I have been trying to secure this debate. I want to focus on the actual experience of people in Newcastle upon Tyne North attempting to claim universal credit, in the hope that the Minister will acknowledge the clear failings in the system, do something to address the situation and commit to putting the failings right before universal credit is rolled out elsewhere.
To put this into context, the universal credit live service was rolled out to three jobcentres in Newcastle in April 2015, following which full service universal credit was introduced to Newcastle’s Cathedral Square city centre jobcentre in May 2016, the Newcastle East Jobcentre Plus in February 2017 and finally the Newcastle West Jobcentre Plus on 15 March. To return to the written ministerial statement of 20 July, the Secretary of State clearly said:
“It is essential that the Universal Credit rollout for all claimant types is delivered in an orderly and successful manner; that claimants receive the support they need in a timely fashion; and that welfare reforms are delivered safely as the roll out continues.”—[Official Report, 20 July 2016; Vol. 613, c. 23WS.]
I welcome that aim, but I have to tell the Minister that it simply is not happening in Newcastle. Indeed, it is fair to say that my office has been deluged with complaints from constituents about a universal credit system that is clearly struggling to cope and failing to deliver the support that claimants need in anything like an orderly or timely fashion.
Those concerns include a universal credit verification process that requires claimants to produce photographic identification such as a passport or driving licence, which many simply do not possess and certainly cannot afford, even though some have been in receipt of benefits for several years. Deciding that universal credit must be digital by default has also created significant difficulties for many, making it extremely difficult to obtain information about their claim from a human being. Constituents face long and expensive telephone queues, and when they do get through, they are told to report any concerns or queries via their online journal, following which they have to wait for increasingly long periods to receive a response. The fact that universal credit is centred on an online journal system assumes that all claimants have access to the internet or are computer literate. That is certainly not the case for many people across Newcastle, and it can make it very hard for people to verify updates on their claims or post information about their work activity, which is necessary to prevent their claims from being suspended.
I also have numerous examples of universal credit claims being shut down before they should be; of documentation being provided to the DWP, at the constituent’s cost, and repeatedly being lost or even destroyed; and of totally conflicting, often incorrect, information being provided to constituents about their claims. That is because of a clear lack of understanding about universal credit by the staff who are trying to administer it, and it also results in incorrect payments being made. Indeed, one of the cases I have been handling involves a constituent who received a £600 universal credit payment, while no one at the DWP is able to explain what it is for. There are significant inconsistencies in payment dates and amounts paid, even for people who work regular hours and have regular incomes, leading to overpayments of universal credit that the introduction of real-time information was supposed to prevent.
Claimants are waiting significantly longer than the commonly advertised six-week period to have their universal credit payments processed. That leads to many finding themselves in very serious financial difficulties as they wait for the DWP to get its act together—hardly surprising when all their benefits are rolled into one payment, which, if delayed, can make just about managing feel like an aspiration.
I am listening with considerable concern to the hon. Lady’s account of what the universal credit roll-out is doing to her constituents. My constituents are due to suffer the same fate in December 2017, which means that, with the six-week non-payment period, a lot of them will face the entire Christmas and new year period with no source of income at all. Does she agree that at the very least the roll-out should be suspended, and that the best result would be to follow the Scottish Government’s request to stop this process immediately, fix the problems and then continue with expanding it or rolling it out, if that is the right thing to do?
I take on board the hon. Gentleman’s serious concerns and, indeed, implore the Government to get this process right before they roll it out across the country.
There are also some fundamental flaws in the system. The fact that payments are made monthly and in arrears effectively embeds debt into the system—as landlords awaiting receipt of the housing benefit element of universal credit know all too well—and requires repeated applications for advance payments from DWP and/or budgeting skills, which many people sadly do not have. Indeed, the Joseph Rowntree Foundation recently commented:
“People risk debt, destitution and eviction while they wait…to receive their first UC payment”—
a description that surely belongs in the world of Charles Dickens, rather than in the modern, fit-for-purpose and efficient social welfare system that we should have in 21st-century Britain.
So what was the DWP’s initial response to the increasing number of complaints about universal credit claims? In a letter dated 20 January 2017 and addressed to
“Colleagues working in the welfare advice sector”,
MPs in full service universal credit areas were informed that they could not receive any information about a constituent’s case unless the constituent in question had provided online explicit consent directly to the DWP. The letter stated that such consent
“must be given freely, unambiguously and in an informed way. The claimant must be clear on the information that they want to be disclosed and who the information can be disclosed to…Consent does not last indefinitely, but covers a particular query or piece of business.”
Even when I had been sent an email by a constituent that provided me with all the details of their case and that specifically asked me to intervene on their behalf—usually because they had reached the end of their tether —that was not deemed sufficient proof for the DWP to provide me with information about the case. I am, of course, pleased that that ridiculous situation has now been reviewed, after complaints by many hon. Members and an intervention by the Leader of the House, but I must emphasise that it caused weeks of additional challenge for my constituents and for my caseworkers in Newcastle, who were deluged with universal credit cases but could not receive any sensible information about them.
The Minister need not take my word for the problems that people face in Newcastle. He can come and visit the Newcastle citizens advice bureau, for which the DWP’s explicit consent edict remains in place. He can hear about the 85 universal credit clients from Newcastle upon Tyne North alone that the bureau has supported in the last year, who have faced severely delayed payments and, in the bureau’s words,
“unnecessary hardship through no fault of their own”.
They face that hardship because of difficulties in finding or accessing a computer, failure of jobcentre staff to provide information about advance payments, incorrect information held on claimants’ records, incorrect advice being provided by jobcentre staff, and incorrect payments being made.
Alternatively, the Minister can come and meet staff from Your Homes Newcastle, the arm’s length management organisation responsible for managing Newcastle’s council housing stock, to discuss the significant level of support that they are having to provide to tenants through the universal credit process. Indeed, Your Homes Newcastle has highlighted that it and Newcastle City Council have so far provided support to 506 people,
“specifically to help those who may be unable to manage monthly payments or don’t understand UC and need explanations at the very start of their claims. The time taken to support customers in personal budgeting varies between 2 and 15 hours of support, although there are some exceptional cases where this can take considerably longer. The average time per case is currently 3.5 hours and this is carried out by staff co-located at Jobcentres. The cost of placing three staff in Newcastle Jobcentres to provide this service is £93,651 annually.”
That support is above and beyond the 25 minutes to two hours that it can take Your Homes Newcastle staff to assist tenants through the initial universal credit claim process. Some of the more complex cases can take significantly longer. Indeed, Your Homes Newcastle staff have highlighted the case of one tenant whose universal credit application has taken them approximately 100 hours to progress. Throughout that time, the woman has seen a significant decline in her health and wellbeing, as well as real financial hardship because of the severe delays and mistakes on the DWP’s part. If this represents a simplification and streamlining of the benefits system, I dread to think what a more complicated system would look like.
Of particular concern to Your Homes Newcastle is the significant impact on rent arrears of the roll-out of universal credit and the associated delays. I know that the Minister has repeatedly claimed—no doubt he will do so again this afternoon—that a large number of cases that enter universal credit have existing rent arrears. However, Your Homes Newcastle has made it clear to me that its current income collection rate is 93.9% of the rent due from tenants who are on universal credit, compared with 99.8% of the rent owed by other tenants. As a result, there was a reduced income collection of £220,000 for customers on universal credit at the end of the financial year. Your Homes Newcastle went on to state that tenants on universal credit owe a total of £784,000 in rent arrears, of which some £381,000—just under 50%—are solely as a result of universal credit. As Newcastle City Council has informed the Select Committee on Work and Pensions, of the 1,380 Your Homes Newcastle tenants claiming universal credit on 10 March, some 1,186—more than 85%—were in rent arrears. The average level of those rent arrears was £686, more than double the average of £300 for YHN tenants in rent arrears. Clearly the situation is completely unsustainable.
Housing-related concerns about universal credit are shared by the homelessness charity Crisis, which clearly states that, as it currently operates, universal credit
“is causing rent arrears, threats of eviction and homelessness for our clients”.
Meanwhile, the Residential Landlords Association has raised concerns that
“as it currently operates, Universal Credit is causing rent arrears problems for a considerable number of tenants. Changes are needed to provide tenants and landlords with greater confidence that rent can be paid on time and in full.”
All three organisations—Your Homes Newcastle, Crisis and the RLA—are pressing the Government to make alternative payment arrangements much easier to set up.
It is clear to me and to many other hon. Members that the roll-out of universal credit is having a significant detrimental impact on far too many of our constituents. These issues are not unique to Newcastle; they are being replicated across the country, as other parliamentary debates—including one recently secured by the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—have made all too clear. Indeed, some of the concerns that I have highlighted this afternoon recently caused the Work and Pensions Committee to reopen its inquiry into the impact of universal credit. The Chair of the Committee, my right hon. Friend the Member for Birkenhead (Frank Field), commented:
“Despite a growing body of evidence about the very real hardship the rollout of Universal Credit is creating for some, often the most vulnerable, claimants—and the struggles it is creating for local authorities trying to fulfil their responsibilities—it is flabbergasting that the Government continues to keep its head in the sand.”
On behalf of my constituents, of people in other areas in which universal credit has been fully rolled out, and of people in the rest of the country who will still have to endure this process, I strongly urge the Minister to take his head out of the sand and start addressing the very real issues that the roll-out of universal credit—the Government’s flagship policy—is causing. We must ask ourselves: how many times, from how many people and organisations across how many parts of the country must the Minister hear that universal credit is not working before he finally accepts that it is time to act?
I will call the Front Benchers at 3.42 pm, half an hour before the end of the debate at 4.12 pm. I ask hon. Members to speak for between five and six minutes, so that everyone gets an equal share.
It is an honour to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing this important debate and on her thorough and comprehensive speech.
Like the hon. Lady and probably every other hon. Member present, I am contacted daily by constituents who have encountered significant problems with the benefits system. In some parts of my constituency, principally Kirkintilloch and surrounding villages, that situation has been made many times worse by the roll-out of full service universal credit. I know from speaking to local people, advice agencies and landlords that, in short, the roll-out of universal credit there has been a dog’s breakfast. It has had profound implications for the constituents concerned, and I support those who call for it to be halted now.
I was contacted recently by a constituent who is suffering from depression, anxiety and agoraphobia. She described the “living nightmare” of waiting six weeks for her payment, which itself represented a £30 cut to her previous social security payments. She concluded her email to me by relating the
“enormous negative effect on my mental health…I can honestly understand now why so many people struggle and give up and end up taking their own lives. This has to stop”.
The hon. Member for Newcastle upon Tyne North has already pointed out some of the major flaws in universal credit. A key point is that those flaws are not teething problems that can be simply ironed out as we muddle along, which is what the Government seem to think. As the hon. Lady has said, all the evidence suggests that there has been an incredible upsurge in the number of cases of claimants building up rent arrears caused by the huge gaps between applications and payments, the very restricted ability to request direct payments to landlords and significant problems resulting from the system of monthly payments, all of which create huge budgeting problems and personal budget crises.
Most fundamentally, as the hon. Lady has pointed out, many of the changes referred to, combined, are set to punish families with children. We have heard from some organisations that families will be left worse off by up to £1,000 a year by 2020, but single-parent families are particularly hard hit by a massive £2,380 cut on average. We know that overall the Government’s pursuit of cuts looks set to force up to 1 million more children into poverty in the years ahead.
When a social security system acts completely contrary to its original purpose, and when its so-called reforms are substantially increasing rather than reducing poverty, it is surely time to go back to the drawing board and ask what we are seeking to achieve. While people and families suffer, landlords and advice services in my constituency are also finding this situation a nightmare. There are concerns that it is leading private landlords to shy from accepting tenants who are in receipt of universal credit payments.
I want to raise one specific issue that not been touched on yet: what seems to be the shambolic system for processing applications for alternative payment arrangements. The class of people entitled to make such applications is limited, but it will become significant in volume because it includes many of those in arrears. Housing associations in Kirkintilloch tell me that problems arise even from the outset, with applications for APAs not acknowledged or processed. Indeed, multiple application forms are sent out to the organisations involved. Most importantly, payments appear to be utterly erratic. As I understand it, the housing association is supposed to receive one payment for all the tenants on APAs each four weeks.
However, I understand from one housing association that since an initial payment was made in December it has only received payments for perhaps two or three tenants when there are supposed to be around 14 or 15 on APAs. In addition, they are receiving APAs for ex-tenants, despite notifying the DWP that they have moved on. Their concern is that if this is happening in a relatively small area such as Kirkintilloch, roll-out in places such as Glasgow will be an even bigger disaster both for constituents whose arrears are going through the roof and for the housing associations relying on the payments. As Crisis argues, the mechanisms for allowing direct payments must be made simpler and more accessible.
In addition, as with other advice services, advisers working in housing associations highlight the huge logistical problems caused, as the hon. Lady has said, by the abolition of implicit consent. To go beyond that, advisers have also raised the lack of places for them to go now to escalate and resolve issues faced by clients and tenants. For all those reasons, I argue that the roll-out should be stopped now. If the Government insist on carrying on regardless, they should take urgent action to resolve the predicament of too many claimants, just as the Scottish Government are looking to use their limited flexibilities to alleviate the worst features of the system. So, allow tenants to choose to have payments made directly to landlords and to have the option to receive twice-monthly payments. If the Government do not listen, their universal credit promises will have been broken, and a reform that was said to bring simplicity will instead bring complexity and cuts.
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) on securing this important debate, as the daily lives of our constituents are being adversely affected by the operation of the universal credit system. I want to highlight for the Minister a couple of examples of West Lancashire constituents who are in receipt of universal credit and what their experience is. The system is far from improving work incentives and tackling poverty among low-incomes families and far from developing a particularly effective new administrative system. Families are not paying only the financial cost of the system failures; there is an emotional cost as well.
As for improving work incentives, a young person in West Lancashire was offered four days’ work. In accepting, he had to get the jobcentre adviser to sign a form confirming that he was in receipt of universal credit. If the forms were not completed by the deadline set by the employer, the job offer was to be withdrawn. Two days before the deadline, he was told that the form would need to be sent to the DWP’s Wolverhampton office to be signed, which was ridiculous. Only through my intervention and the good sense of a senior jobcentre official was the matter resolved in the end.
It strikes me that there is an organisational culture in the DWP in which process trumps outcomes. I have dealt with the case of a single parent with one child going out to work. Their problem was caused by the unintelligent and inflexible assessment system that universal credit operates. Those of us who are paid monthly know there are occasions when our payday is earlier owing to the standard payday falling on a weekend or a bank holiday. In some instances, universal credit assesses a person as having two sets of income in the one month and therefore they do not get any payment. In the case of my constituent, they lost out on £350 for their childcare costs. The following month, the payday was also brought forward.
I suspect that the Minister will say that, in the round, the payments will equalise out, but that fundamentally ignores how household budgets operate and the family’s need for the payments they receive to be consistent and regular. For families whose day-to-day existence is financially balanced, that leads to them asking whether they are really better off in work, if that is the result. A change in one month’s payment can have a ripple effect that lasts considerably longer than one month for a family’s financial position to recover.
Another West Lancashire family, a working couple in receipt of universal credit, experienced problems receiving payments in four consecutive months, which included their claim being incorrectly closed after the information that the claimant provided was not entered in the system. Having not received their payment, they called the Department to seek an explanation and asked for a call back. Owing to the request being processed incorrectly, there was no call back. In months three and four, payments were again not paid. What did the DWP do? It sent a letter apologising for the repeated failures, which it said were due to an “oversight” on the part of the Department for Work and Pensions. Well, that’s okay, then—I think not. Anybody with an ounce of compassion for the people they deal with would not even put such words on a piece of paper.
For their trouble, the family received a £25 consolatory payment, although the DWP could not say when that would be paid because it takes weeks to process. I am sure that, for the Minister and the people operating the universal credit system, such failures seem to be minor administrative mistakes. I raise them in the desperate, perhaps forlorn, hope that the Minister will begin to understand that such mistakes have monumental and disproportionate consequences for the people on the receiving end. It is not only about the financial costs; there is a lasting emotional cost.
I look forward to hearing the Minister’s reply, but I remind him that he will be judged by his actions in making the system better for families, rather than contributing to their daily struggles. He has that responsibility.
I have been advised that, as names have rolled over from the previous time, unfortunately I have to restrict the time limit to four minutes. I apologise for that, but there are many people with an interest in such an important subject.
It is a pleasure to speak in this debate, Mr Davies. I congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on setting the scene so well. The subject is a concern for my constituents. Although there is no roll-out at the moment in Northern Ireland, it is on its way and September will be the witching hour for it coming in, so we have some concerns. I am worried about my constituents who have mental health issues, which are exacerbated by stress. Health issues have been very much in the media over the past few days. Prince Harry and Prince William are examples of those with stress-related issues, and I wish to express concern about such issues. I firmly believe there is a better way of doing things.
We are all aware of the report submitted by Crisis, which I am sure Members have read. It is not easy reading for any parliamentarian. It relates to the most vulnerable in our society. The report suggests that the overwhelming majority—89%—of English local authorities surveyed for “The Homelessness Monitor” in 2017 have expressed concern. New claims for universal credit are typically taking eight to 12 weeks to process—much too long. Delays are being experienced by people with more complicated circumstances, including those who have lost identification documents during a period of homelessness. Those were issues that I did not expect. I certainly did not expect people to be waiting for up to three months to receive the calculation of their benefit entitlement. I will never forget seeing a billboard for the Simon Community homelessness charity, stating that one in three families in the UK are only a month’s pay cheque away from losing their home. That is something that sticks in my head. So one in three could lose their home before universal credit would be processed to pay them. That is almost incredible, and it is totally unacceptable.
What is being done to address the failure in the system? What is in place to help those who may lose their home during the waiting period? The monthly payment to people who are not used to budgeting and, indeed, do not know where to start to budget their finances is not helpful. Crisis clients are struggling to budget over a monthly period, and because many have had their rent paid directly to their landlord for years and simply do not know how much their rent is, it is a massive issue. The same issue is relevant to landlords, 68% of whom say that direct payments of universal credit housing costs to claimants have made them more reluctant to let to people receiving universal credit. If the system disadvantages applicants to start with, and disadvantages them again with the landlords, we must look at it. Sixty-six per cent of landlords say the current situation has made them more reluctant to let to homeless people. That was not the intention behind universal credit, but if it is now a fact of the process, we must address the issue as well.
As well as the planned six-week delay in first payment, waiting days and the maximum backdating period of one month, people are experiencing unforeseen delays as a result of administrative errors: a third penalty—and the administration system lets them down again. Those issues are causing rent arrears, threats of eviction and homelessness. It is clear that the DWP should reduce the waiting time between submitting the online application and being invited to appointments necessary to progress the claim, and that waiting days at the start of a claim should be abolished. At the very least an exemption should be introduced so that people who are homeless do not have to serve waiting days. Where is the compassion and understanding in the system? I have great concerns about what the impact will be on households across the Province and, indeed, in my constituency. There must be a rethink of the scheme, with special reference to circumstances in Northern Ireland. Let us learn for the future from the problems of today. The most vulnerable people are being put into an untenable situation and we must help them, not worsen their living situations. I again urge the Minister and the Department to rethink the whole scheme completely, immediately.
It is a pleasure to serve under your chairmanship, Mr Davies. I pay tribute to the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) for obtaining this important debate. All the hon. Members who have spoken have made many constructive and proactive points based on individual experiences and the casework that we all regularly do. I know that in the Minister we have someone who is keen to listen and engage, and to take many of the challenges that have been raised today. I hope that he will further improve what is an important way of dealing with benefits in a modern society.
Universal credit is a vital part of our being able to deliver record employment in every region of the country and, crucially, to help improve people’s future opportunities and not just simply get them into work. The fundamental difference—this helps with many of the challenges that have been raised—is that for the first time the claimant has an individual, named work coach, someone they can turn to throughout the whole process. When opportunities and challenges come up, there is someone to help them to navigate the securing of additional childcare, training and support. Evidence has already shown that those on UC are typically able to spend 50% more time looking for work. For every 100 people who found work under jobseeker’s allowance, 113 found it under universal credit. It has removed the dreadful 16-hour cliff edge that under the old system prevented people from progressing towards full-time work, and it makes sure that work always pays better than benefits, with the support of claimants and taxpayers.
Crucially, the individual support is allowed to be personalised and tailored. I was interested to see what difference that makes, so in the past month I have twice been to visit the Swindon jobcentre to see how claimants are progressing through the system and to meet the staff, who in the past 20 years have navigated a huge amount of change from Governments of different parties and political persuasions. I went to see what was making a big difference. Swindon is an early adopter and we have been rolling out UC for quite some time. I understand that perhaps there is more experience there than in some areas where it is only beginning to come in.
I made notes on my visit. The staff are not people who will always give representatives of Government an easy ride, but they made it clear to me that they saw UC as a cultural change. The morale of the staff had significantly improved, as they were empowered to offer personalised, tailored support for the people who are often those furthest away from the jobs market. As we get close to structural full employment, the people seeking work need additional support, and we have empowered the staff to give it. In conjunction with the introduction of UC, jobcentres are being refreshed. The layout is brighter and less cluttered and the centre is a hive of activity, which is less intimidating for the claimants coming in. It is interactive and vibrant, and the staff felt they were a collective team, working together to help to support the people most in need of it. They felt that the ethos was now about what they could do to help; it was a conversation, and small steps. It was not rigid. It was removing the stigma of the jobcentre and encouraging external organisations to work in partnership to deliver the key improvements.
For me, the final thing was the recognition that the issue is not as simple as getting someone into work, typically on the national living wage. It is about providing support once they are in work and have shown they can turn up, and shown their dedication. It is about their being able to increase their hours, get promotion, become a supervisor and get additional training, so that they can progress up the career ladder that many of us took for granted. I was surprised at how positive the staff were. Yes, there are challenges—that is why there is a debate and why the Minister needs to engage with the issue—but overall UC is making a crucial difference to some of the most vulnerable people.
I do not want to repeat things that have already been said. I want to concentrate on the impact that universal credit is having on homelessness and the potential for the eviction of private tenants. In my experience from my constituents, the delay in assessment of cases has undermined and threatened the tenancies of a considerable number of people. When housing benefit administration was part of the local authority, there was an officer responsible for preventing homelessness. In my case, I am fortunate that Mr Langley has been in charge of the housing department for as long as I have been the MP for Mitcham and Morden. When I had a problem with a constituent being threatened with homelessness, he would go down to housing benefit and say, “You’ve got to get on top of this case and process this claim.”
That intervention is no longer happening. Most of the constituents I see are in work. They all go to work but have no opportunity to earn the sort of money that would pay a private rent, often in the region of £1,200 or £1,500 a month. It does not take many weeks for people to find that they have got behind by hundreds or thousands of pounds, and for it to feel impossible that they will ever get on top of that. Officers of Jobcentre Plus and researchers may tell Ministers all sorts of things, but my experience is that when I recently attended a private landlords forum and asked, “Does universal credit make it more or less likely that you will rent your property to someone dependent on assistance with their rent?”, they said that universal credit made it universally less likely they would do so. The consequence in the housing market, where social housing vacancies are reducing by the week, will be devastating. As a result of poor and slow processing of universal credit, local authorities are, and will be, picking up large families in temporary accommodation—at huge cost to the taxpayer, apart from the misery involved.
It is a pleasure to serve under your chairmanship, Mr Davies. I, too, congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing this debate. We always say that debates are important, but this debate is vital for people who are suffering through the universal credit full service roll-out.
My constituency of Inverness, Nairn, Badenoch and Strathspey was one of the pilot areas, so we were ahead of the game in terms of the full service roll-out. We have seen the effects of it on real people and the Minister will be aware that I held an Adjournment debate on those effects, giving many case studies. We do not have the time today to go through many of them, but I will touch on one.
There are still the same problems that there were at the time of that earlier debate, and still the same problems that there were when we were originally scheduled to have this debate. The UK Government should listen and halt this faulty roll-out. People are going months without money; the roll-out is increasing poverty. It is hitting the most vulnerable the hardest, and it is causing real harm. In my constituency, we now have well over a hundred cases of people with universal credit issues, and those are just the people who have reached out to us as an MP and his office. Many more people are going under the radar. Also, there are new people visiting my office every day.
I want to refer to one person, Rachael, who came to see me. She went 16 weeks without payment. At the time she sought our support, she was 22 weeks pregnant and also had a three-year-old daughter to look after. Her pregnancy left her very unwell, but she was still told to travel to Aberdeen, which is 100 miles away, because it was not accepted that she had the correct national insurance number for universal credit purposes. She was fainting and had other symptoms due to the pregnancy. She had virtually no money left, and what little she had she was using for food and warmth as she could.
Rachael could not afford to go to Aberdeen and was scared of going 100 miles without any support, which caused her significant mental distress. She even had a letter from her midwife saying that she was unfit to travel. She was already in receipt of child tax credits and child benefit without any issues arising. Until a couple of weeks prior to contacting us, she had been in work and paying NI, and even though the NI number was never contested for universal credit purposes, she had paid NI and also had a P45 after leaving that employment.
Eventually, and following my intervention, it was agreed that Rachael could attend a face-to-face interview at the jobcentre in Inverness, and she has now started receiving payments. However, her story is symptomatic of the stories of many other people who face making long phone calls to get through to people, causing them high phone bills. Departments are unable to communicate, conflicting information is given, and delivery partners are unable to speak directly with Department for Work and Pensions colleagues.
I have asked the Minister to come to my constituency to speak to the staff at the citizens advice bureau and to the partners that the UK Government have employed to deal with this issue, such as Highland Council. The hon. Member for North Swindon (Justin Tomlinson) should come to the highlands as well to speak to people there, because he will find a very different reception to this roll-out. The DWP staff and jobcentre staff are under enormous pressure; it is not fun to work there.
I do not have much more time today to say what I would like to say. There is much, much more that I could put to the Minister. This roll-out is devastating the lives of people in my constituency, and it is coming to other constituencies. It is a shambolic roll-out, which means hardship and pain; it is simply brutal to people. There has been no sign that the Tory Government are capable of listening or caring, especially on issues such as the rape clause. The Minister could listen to people; he could visit; he could learn; and he could and should stop the roll-out. He can fix it and treat people with dignity. Will he agree to do so today?
Universal credit is often described as a troubled programme, and the problems with it go right back to the initial naivety of Ministers about implementing a programme of this scale. My hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) pointed out in her excellent opening speech that we were originally told that it was all going to be done and dusted by October 2017. I was the Opposition spokesperson in this area at the time that was said, and I pointed out that that was not a plausible timescale. We are now told that it will be done by 2022, which is five years’ late, and it will be delayed further still.
The most astonishing example of naivety was in “21st Century Welfare”, a document published in July 2010. Paragraph 7 of chapter 5 says:
“The IT changes that would be necessary to deliver a more integrated system would not constitute a major IT project”.
That is the heart of the problem. There was an utter failure at the outset to grasp the scale of what was involved; there has been not just one major IT project but several.
There is an enduring problem, which probably underpins a number of the difficulties that we have heard about today, including the unexplained overpayments that my hon. Friend referred to in her opening speech. That problem is the fact that real-time information does not work properly. RTI is the system through which employers notify Her Majesty’s Revenue and Customs in an automated way about how much they are paying to each of their employees in each month. It appears that there are serious inaccuracies in the data being sent to HMRC. Of course, those data are then sent on to the Department for Work and Pensions, and as a result errors are being made in the calculation of how much universal credit is due. It looks as though that will become an increasingly major problem.
It is well-known that there have been problems with RTI. We were promised that a post-implementation review was going to be published last month. It has not been published and there is no sign of it as yet, which reflects the scale of the problems that HMRC is facing. The Institute of Chartered Accountants in England and Wales submitted evidence to the post-implementation review almost exactly a year ago, saying:
“There is a significant risk to the successful roll-out of universal credit…if immediate steps are not taken to resolve the underlying system issues that lead to data corruption within HMRC systems, which are then passed on to universal credit claimants.”
Can the Minister give us any reassurance that these very serious problems will be fixed by HMRC before we have more problems of the kind that we have heard about today, or can he at least tell us when the post-implementation review of RTI will finally be published?
There are benefits, in principle, from universal credit; the hon. Member for North Swindon (Justin Tomlinson) has a point. Community Links—which works with jobseekers and claimants in my constituency and which has pointed out repeatedly what a grim experience going to the jobcentre has become since 2010 because of the changes that have been made—also says: “At its best, universal credit has transformed client-coach relationships for the better”. There is real potential and the system could be significantly better, but it will not improve and its potential will not be realised unless these major technical problems are resolved. I hope that the Minister will be able to give us some encouragement that they will be resolved.
I want to speak today to try to balance the picture of doom and gloom that some Members have painted about not just universal credit but the entire welfare system and indeed all the welfare reforms of the past seven years.
In early 2009, I received an extremely emotional letter from a constituent who had tried to do the right thing by going back to work. However, she immediately found that by working more than 16 hours a week she was in fact far worse off. She asked me how that could be—why did welfare policy trap her and not help her? I promised then that I would work as hard as I could for a system where work always pays.
When I hear the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) saying that people working through universal credit are only 37p in the pound better off net of reduced benefits, rather than the 45p in the pound that was originally intended, I want to remind her that that same person was not only nought pence better off per pound under the previous Labour system but was significantly worse off as a result of being unable to keep any of the money she was earning and losing significantly as a result of the benefits lost. So universal credit delivers on the “work always pays” approach and I hope that we will never go back to a system where work does not pay.
Equally, when other Members complain about the delayed roll-out of universal credit, I remind them how disastrous the “big bang” approach of the roll-out of tax credits only a decade ago actually was. The gradual process of rolling out universal credit is infinitely preferable.
Let me also give some reassurance to the hon. Member for Strangford (Jim Shannon), who is not currently in his place. He is awaiting the arrival of universal credit, but it is good news for his constituents and, when it arrives in his constituency, he should go and see the people on it, as I have done in my constituency of Gloucester, and hear from them what their own experience is. In fact, earlier today I spoke to the Jobcentre Plus in Gloucester. Its staff are broadly very positive about universal credit. We now have 720 people on it, of whom roughly 220 are working. Many of the others are on training courses, including for things such as forklifts. That is broadly good news, but that does not mean that everything is perfect.
The Work and Pensions Committee started an investigation into universal credit only a few weeks ago. I am afraid we will be unable to finish it before Parliament is prorogued, but it has flagged up two issues that others Members have alluded to and which I hope the Minister will touch on in due course. The first is the delay in payments to individuals, and the second is the inability of some who are claiming universal credit to manage their finances adequately so that they do not get into arrears on their rent payments. Both are real issues. There is a case for saying that some housing associations need to engage with their tenants more effectively than they have in the past. Guaranteed payments are an extremely easy business for any landlord; none the less, there are problems, and most jobcentres and housing associations will confirm that.
In conclusion, universal credit is happening. The slow and arguably delayed roll-out is a good thing in terms of allowing for the problems that occur with any big system to be rectified early, before the system goes nationwide. It is coming on faster now, and there are two specific areas where the Department will need to look closely at whether improvements can be made.
I think a profoundly concerning picture has been painted for us today of how the roll-out of universal credit is proceeding in practice. I warmly congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on focusing her attention on that, and I am glad we have had the opportunity to debate these issues prior to Dissolution. She and the other Members who have spoken have constituencies that have been at the forefront of the full roll-out of universal credit, and they have outlined a litany of problems that are having a severe impact on the people affected—problems that are causing immense hardship, debt and insecurity and are putting huge, unnecessary and wholly avoidable pressure on other public agencies.
Many of those problems were widely predicted. For example, a range of stakeholders—everyone from social landlords to homelessness charities and those working with disadvantaged groups—warned that the full service roll-out was likely to lead to a sharp rise in rent arrears and evictions. Many warned that the move to monthly payments could lead to hardship for people on very low incomes. Unfortunately, from the testimony of MPs this afternoon, those fears were well founded. Some of the other problems highlighted today, such as the unacceptable delays in receiving payments, the exorbitant cost and prolonged call handling problems with the telephone helpline, were not anticipated, in that they are not policy changes, just failures of the system. People claiming universal credit in the full service roll-out areas have been human guinea pigs in the process and are paying a heavy price.
Two key issues have arisen today with the delays in payments. First, even if the system was working perfectly, many claimants would wait six weeks for any money. That is an excessively long wait for new claimants, particularly when we know that people rarely claim as soon as they become entitled to benefits. Usually they exhaust their savings or redundancy package.
The debate will go on until 4.22 pm. I call Dr Whiteford.
Usually people have exhausted their savings or redundancy money before they claim benefits, but if someone starts a new job, it is normal to be paid at the end of the week or month in which they start. The Government have said consistently that they want universal credit to mimic the world of work, but in that respect it really does not, and they need to look urgently at waiting times.
We all understand that processing a claim will take some days, but the monthly payment and discounted first seven days slows down the process unnecessarily and leaves people in considerable hardship. In reality, many claimants are having to wait a lot longer than six weeks. Eight to 12 weeks is more typical in some full service areas, and often longer. That is just not okay, and we have heard today about how those problems are not just abstract. I know from previous discussions on the subject that people have lost their homes. Many people on universal credit will be in work already so may have some other source of income, but a significant minority of new claimants will be sick and disabled people, assessed as unfit for work, and people who have just lost a job. The advance payments available are simply inadequate and are driving people into food banks, into debt and into trouble with their landlords. The bottom line is that the system is failing. It is in chaos.
Rent arrears are possibly the most far-reaching adverse impact of the full service roll-out. The Highland Council alone has seen rent arrears soar by £1 million, which is entirely and solely attributable to the roll-out of universal credit. My concern is that that is just the tip of the iceberg. We can get accurate figures of the scale and extent of the problem from local authorities, but the impact on other social landlords is likely to be profound. I know that housing associations in Scotland have warned that increases in arrears damage their financial stability, hitting their ability to invest in existing properties and build new ones. Private sector tenants and landlords face significant problems too, given that landlords may be servicing mortgages and may not have the level of solvency needed to wait several months for unpaid rent. We are already witnessing evictions. Just as worrying, we are already seeing evidence that some landlords are simply refusing to consider universal credit tenants.
Evictions and homelessness cause untold upheaval and misery for all involved and have a huge impact on other public services. The homelessness charity Crisis reports that 89% of English local authorities fear that the roll-out of universal credit will exacerbate homelessness. That situation is avoidable. We do not need to go down that road. The Government need to get a grip.
The Government have offered the excuse that the sharp increase we have seen in arrears appears to fall over time, several months down the line, but, frankly, that obfuscates the scale and extent of the increase in arrears. It also obscures the debt and hardship that those tenants, on desperately low incomes, are enduring in order to pay off a level of arrears that they would never have incurred under the previous system. It is yet another way in which the universal credit system fails to mimic the world of work, where most landlords require rent to be paid upfront a month in advance and, certainly in the private sector, expect sizeable deposits. Once again, the systemic pressures of the new system are being borne by people on marginal incomes—those with the fewest assets and means, working in the lowest paid jobs, recently unemployed or unable to work because of ill health or disability.
The other major breakdown in the system is in relation to the online accounts and problems with call handling on the telephone helpline. In many parts of rural Scotland, digital connectivity is well behind that in urban areas, notwithstanding significant recent progress. In my own constituency, 25% of people do not have access to the internet. It also remains substantially more expensive than in urban areas, and because of that, there are significant numbers of people with limited digital skills and experience who rely heavily on public access terminals.
My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) highlighted the high costs and time involved in travelling from rural areas to a diminishing number of jobcentres. I do not think a 200-mile round trip is acceptable. To put that trip in perspective, it would be like asking somebody here in central London to travel to Nottingham or Stoke-on-Trent for a DWP appointment. I do not think that is realistic.
My hon. Friend also highlighted a litany of problems with the telephone helpline. If someone calling from a mobile phone has to wait half an hour on the line, they could spend as much as a third of their weekly income on food, heating and essentials. Twenty quid may not sound like a king’s ransom to higher rate taxpayers, but for someone on a very low income, it is an enormous amount of money. Even if the Government’s assertion that waiting times are only eight or nine minutes was backed up by the documented experience from MPs’ offices and citizens advice bureaux, that is still a fiver. Proportionately, that is a lot of money for someone in receipt of £73 a week who is struggling to pay rent, heat their home and buy food.
Universal credit should have been quite easy to roll out in the highlands, in that there is a relatively buoyant labour market and universal credit should, in theory, be better suited to managing patterns of seasonal employment, which is widespread in the region. But it is proving to be a disaster, not just there but, as we have heard today, across the UK.
My last point is this: leaving aside the catalogue of incompetence that has dogged universal credit from the start, the new benefit is turning the screws on low-income working families and is now unrecognisable from its original design. According to the Child Poverty Action Group, by 2020 families with children will be, on average, £960 pounds a year worse off than they would have been under the previous system. The effects are magnified for families where one parent is working full time and the other is working part time or is at home with the bairns. Parents of severely disabled children are losing out. Those who will be most disadvantaged are single parents working full time in low paid jobs, who will be, on average, £2,380 pounds worse off. That is almost £200 a month.
The idea that work always pays under universal credit is just nonsense. It is a massive cut in household income and it punishes people who are already working full time, doing everything they can to make ends meet. For some of those people, work will no longer pay, and they would be better off if they cut their hours. That is exactly the opposite of what universal credit was designed to do. The policy has been so filleted by successive austerity cuts that it is no longer able to deliver the improvements it promised. Instead, it is set to drive up child poverty.
As we have heard today, the full service roll-out of universal credit is proving to be a disaster. It is causing chaos for landlords, housing associations and local authorities. It is causing turmoil, upheaval and real hardship in the lives of claimants who are entitled to support. We have had no adequate assurances from the Government that the systemic failures are being addressed. In those circumstances, I believe that we need to call a halt to the universal credit roll-out and go back to the drawing board, because at the moment it is an unmitigated mess and ordinary people are paying the price.
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) on her persistence in securing today’s debate and on delivering an excellent, wide-ranging speech. I associate myself with her remarks about the debt of gratitude we owe to PC Keith Palmer. My thoughts are with his family and friends, and all those who lost their lives or were injured in the attack on 22 March. Today’s debate is really important, and we have heard compelling contributions from many Members, including my hon. Friends the Members for Mitcham and Morden (Siobhain McDonagh) and for West Lancashire (Rosie Cooper) and my right hon. Friend the Member for East Ham (Stephen Timms), who spoke with real authority and insight.
In 2010, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), the then Work and Pensions Secretary, announced that universal credit would radically simplify the existing social security system, make work pay and help lift people out of poverty, but the stories we have heard today show that that is simply not the case. Universal credit brings with it a huge range of problems. Its roll-out has been repeatedly delayed. So far, the completion date has been moved back seven times. It was originally set for the end of this year, but the Department is now aiming for March 2022. The roll-out is still mainly restricted to groups whose claims are reasonably straightforward, such as single people without children. However, the Government now intend to speed up the roll-out, and my hon. Friend the Member for Newcastle upon Tyne North described how the introduction of the full digital service is now causing major problems in areas such as her constituency. The former Work and Pensions Minister, Lord Freud, told the Work and Pensions Committee in February that universal credit could take decades to perfect. Does the Minister agree with Lord Freud on that point?
The design of universal credit means that claimants are left for six weeks at the start of their claim without any income while their initial claim is processed. In some areas, the wait is even longer due to delays in dealing with claims. Croydon Council said in January that the average delay is 12 weeks. That can cause people to be in arrears with their rent, leaving them at risk of eviction and turning to food banks. What are the Government going to do to reduce the delays, and will they end the six-week initial wait for payment?
Then there is the Catch-22 that arises when universal credit meets a council’s legal obligations in relation to housing. If councils house people waiting for a payment in temporary accommodation, they are legally obliged to ensure they do not remain there for more than six weeks. However, to claim help with housing costs through universal credit, someone must have lived in a property for at least six weeks. Will the Government reconsider that rule, which does not fit in with councils’ legal obligations?
Once a claim has begun, payments are monthly under universal credit, rather than fortnightly, as with tax credits. That causes some claimants problems with budgeting. There is evidence that private landlords are becoming increasingly reluctant to rent to universal credit claimants because there is no provision for direct housing payments to the landlord except where someone is assessed as being vulnerable or already has two months’ rent arrears. Will the Minister look again at the issue of direct payment of the housing cost element to landlords so all tenants claiming universal credit can choose to do so?
[Mr David Nuttall in the Chair]
An investigation by The Guardian recently revealed widespread evidence that thousands of tenants on universal credit are running up rent arrears because the minimum waiting period for the first payment is just too long. Surveys by housing associations found that up to nine in 10 tenants on universal credit either run up rent arrears or increase the level of pre-existing arrears because many of them are not financially equipped to cope with long waits without any income. In September 2013, a National Audit Office report on universal credit revealed that IT failures had already cost £34 million, and highlighted the
“weak management, ineffective control and poor governance.”
Since November 2014, DWP has been gradually rolling out the full digital service to a limited number of areas as well as the original live service in others. There are differences not just in the way the services are managed and in the kind of claims, but in the rules for claimants between the two versions in relation to childcare costs and assessment periods, for example. Even now, the universal credit IT system is not capable of coping with the two-child limit this April. Families with more than two children who make fresh claims will actually be diverted to tax credits until November 2018. DWP insists on pressing ahead with a policy that is not just morally wrong, because of the way it implicitly treats some children as more important than others, but which the Department cannot even technically implement properly. Will the Government reconsider the two-child policy?
Universal credit poses further challenges. Just as the Government were speeding up the roll-out of UC, they announced plans to close more than one in 10 jobcentres throughout the UK. It is simply not good enough to quote figures about online claims to justify closure plans. Making a claim online can present real difficulties for people who are not confident in using IT or do not have easy access to the internet. DWP admits that it is likely that online claims are sometimes made only with help from jobcentre staff. Sorting out problems that arise is complicated by the requirement that claimants who contact their MP for help also authorise DWP online to release information to the MP. DWP recently said it will not be necessary to do so for MPs, but said nothing about advice agencies and welfare advocates. Will the Minister make it clear that the DWP will release information to advice agencies acting on behalf of a claimant without further online authorisation?
Universal credit will place other new demands on staff, who will have to assess whether self-employed people claiming universal credit have a viable business plan, and operate in-work conditionality, which will require people already in work to increase their pay. Will the Minister look again at the model of generalist work coaches that DWP is adopting to assess whether it is appropriate to the new challenges that universal credit will involve?
Staff will also have to deal with an increased number of claimants. As universal credit is based on household income, the partners of somebody claiming universal credit can be invited to attend a jobcentre to discuss work even if the partner has not themselves made a claim. People not in work who claim child tax credits or housing benefit but not jobseeker’s allowance are not required to look for work at present, but they are required to do so under universal credit. Will the Government reconsider their plans for jobcentre closures, which risk chaos as the speed of the roll-out of universal credit is increased?
Alongside the practical problems that the roll-out presents, changes to universal credit since 2010—especially cuts to in-work support—have undermined its capacity to reduce poverty. The Government have refused to listen to criticisms of cuts to the work allowance from Labour and voluntary organisations. Analysis by the Child Poverty Action Group and the Institute for Public Policy Research shows that families with children will be worse off by an average of £960 a year by 2020, compared with the income they could have expected under the original design of universal credit, and single-parent families could lose £2,300 on average. Will the Minister review the impact of work allowance reductions on working families—particularly working single-parent families?
The combination of the delayed roll-out of universal credit, the U-turn on tax credit cuts and the dramatic changes to universal credit work allowances is actually increasing the complexity of our social security system. If two families have exactly the same circumstances but one claims tax credits and the other claims universal credit, they may receive very different rates of social security. It is a genuine postcode lottery, because that is how universal credit has been rolled out.
Given all that, it is little wonder that the Government are now silent about how many people they believe universal credit will lift out of poverty. In 2011, they estimated that it would be 950,000. Two years later, it had fallen to 400,000, and by last year they preferred to keep silent. Will the Minister tell us the DWP’s current assessment?
We are seeing different rates of social security for people on tax credits and universal credit and different rules for people on the live and full digital services. We have even heard that the Office for National Statistics is concerned that the statistics for the claimant count no longer present an accurate picture of the labour market because they include all universal credit claimants. Is it really a simpler system? Our social security system is already struggling to cope with its introduction, even before the jobcentre closures go ahead. Far from lifting people out of poverty, there is growing evidence that universal credit risks impoverishing people waiting for payments and making it more difficult for claimants to find affordable housing. Severe cuts to in-work support mean that it can no longer genuinely claim to improve work incentives. Even the right hon. Member for Chingford and Woodford Green has called for the cuts to be reversed, as they go against the key principles of universal credit.
Really important issues have been raised in this debate about the effect of the Government’s roll-out of universal credit. There is a huge range of issues, such as debt, eviction, the stress and anxiety for some of our most vulnerable citizens, and pressures on DWP staff and the system itself. I ask the Minister to respond clearly to the points raised in this important debate and explain how the Government intend to get a grip on universal credit.
I remind the Minister that the debate will finish at 4.22 pm, and I ask him to try to leave a couple of minutes for Catherine McKinnell to wind up before that.
It is a pleasure to serve under your chairmanship, Mr Nuttall. I echo what the hon. Members for Newcastle upon Tyne North (Catherine McKinnell) and for Wirral West (Margaret Greenwood) said about PC Keith Palmer and all the victims on that terrible day when last this debate was convened. I congratulate the hon. Member for Newcastle upon Tyne North on securing this important debate. We have had a wide-ranging debate today.
Let me be clear at the outset that the roll-out of universal credit continues to plan. As Members are aware, universal credit is now in every jobcentre in the country. The programme has just passed an important milestone of more than 1 million claims. The service has been deliberately rolled out in a steady way, as alluded to by some of my hon. Friends, using a test-and-learn approach to allow us to user-test the service and get immediate feedback.
In such a large system and organisation, with so many branches and so complex a set of data, I admit that sometimes things go wrong. That is not unique to universal credit, but happens and has happened on occasion for many years throughout such systems. Of course we very much regret that when it does happen, but it does not change the fundamentals of what the universal credit programme is achieving.
The longest-standing senior responsible owner and programme director in the programme’s history are in place, and both have been in post for well over two years. In that time the programme has stabilised and delivered all its key milestones on time and on budget. When last scrutinised by the Major Projects Authority, the programme was moved to an amber rating, which is rare for a project of this size.
Even having the best team in charge is not necessarily enough: it has to be combined with the right project disciplines and the proper oversight to ensure success. That is why the team is implementing a fully developed, agile approach to delivery, explicitly designed to ensure that the service is continuously improved, based on the user feedback that I talked about, and is flexible enough to adapt to changing circumstances or new information. The programme is also subject to comprehensive and rigorous review internally and externally.
All that combines to create the safest, most secure programme delivery achievable. We are working quickly, and will continue to do so, to deal with any challenges, which will of course emerge, to ensure that universal credit is delivered safely and securely. I recognise that there are concerns, and I welcome another opportunity today to discuss and address them.
As part of the UC full service implementation process, we had a full external stakeholder plan to ensure that those stakeholders have a proper introduction to the full service before it goes live in their area. The full service was launched at the Newcastle West jobcentre on 15 March 2017, making Newcastle one of the first core cities to transition fully to the service. I am also aware that the hon. Member for Newcastle upon Tyne North has been in contact with the local district manager for Jobcentre Plus on more than one occasion and that she has been invited for a visit.
A couple of hon. Members asked about the changes being made in the DWP estate. I reassure them that in the planning and modelling we of course account for all the changes to welfare systems and our support for claimants. An important point to make is that although we are changing some of the physical estate, which involves some jobcentres merging with others, we are not cutting back on our frontline people—in fact, we expect to have more work coaches working with and supporting people into and in work at the end of this process than we do at the beginning.
The scale and nature of the change represented by universal credit is bound to cause some anxiety, but the benefits it brings are many, going far beyond the £7 billion in annual economic benefits and even beyond the advantages to claimants of simplicity, stronger work incentives and personalised support. UC represents a generation-changing culture shift in how welfare is delivered and how people are helped, creating a system that allows people to break free from being dependent on welfare, to take control of their lives and to move into work. That will have an impact on a large number of people: we estimate that by the time UC is fully rolled out, about 7 million recipients will benefit from the advantages of universal credit.
We must remember that universal credit picks up from a flawed pre-existing system and strives to solve a number of problems that have for some time been thought to be near intractable. In the old system, complexity and bureaucracy had often served to stifle the independence, to limit the choices and to constrain the outlook of its recipients. With UC, we are untangling the bureaucracy, strengthening the incentives and simplifying the system and the signals it gives.
The behavioural effects we are seeing are strong. Claimants are responding to the clear incentives to work and, as my hon. Friend the Member for North Swindon (Justin Tomlinson) said, spending twice as much time looking for a job as they did under the legacy system: 113 people are moving into work under the new system for 100 under the old system. People throughout the country are therefore already benefiting from universal credit, and more will do so.
The design and structure of UC is transformational in its focus on replicating the world of work. UC encourages claimants to take greater responsibility for their finances and incentivises them to earn more and to make progress once in work. A flexible, clear and tailored claimant commitment helps claimants to understand fully their responsibilities, and a work coach provides personalised support, helping people to stay close to the labour market and to overcome whatever barriers they have to work.
Critically, universal credit removes the hours rules and the cliff edges that have long been a feature of our systems, plaguing legacy benefits and tax credits. UC removes the need to switch between different benefits as people move into and progress in work, simplifying the system and ensuring continuity. It provides a consistent taper for claimants as they move into and through work. The recent taper reduction will benefit 3 million claimants once UC is fully rolled out, providing further tangible and visible benefits to making progress in work.
Thanks to the real-time information link, immediate adjustments can be made to the UC award, which is far beyond the blunt mechanism of annual reconciliation. That also means that people can quickly see the effect of the changes they are making. For the first time we now have simple levers to optimise the system, creating a fully dynamic and adaptable welfare system fit for the modern world. Digital is at the heart of the new system. The majority of jobs these days require some computer capability and competency, so it is also right that the system to help people into work is digital, too, as well as more efficient as a result.
Will the Minister give way?
If the right hon. Gentleman will forgive me, I will not, or I will run out of time.
Let me assure the House that I recognise what a complex and important issue housing arrears are. Many different factors are at play. As colleagues know, UC pays housing costs directly to the claimants and they pay rent to their landlord. That mirrors the world of work, which is an important part of the fundamental culture change I mentioned. That of course has been the case for some time, since the Labour Government rolled out the local housing allowance in the private rented sector in April 2008.
Will the Minister give way?
I will give way to the hon. Lady, because it is her debate, but I am also conscious that I am running out of time and will not be able to cover everything.
The Minister made reference to housing payments mirroring the world of work, but I am aware of no workplace in which the employee is expected to wait six weeks or more for payment.
I am grateful to the hon. Lady for making the important point about the timing of payments to individuals. No one should wait more than 45 days for their first UC payments, unless they are exempt from waiting days, which the hon. Member for Strangford (Jim Shannon) mentioned. Various exemptions include those for prison leavers and for people coming across from other benefits, such as income-related JSA or ESA. For those exempt from the waiting days, the wait is no more than 38 days. A claimant who cannot wait that long, however, may apply for an advance of up to 50% of the total award to provide support through to the UC payment being made. That is an important facility, and we continue to work on raising awareness of its availability.
There have been some delays in the payment of the UC housing element, largely because of, for example, mismatches between what claimants tell us and what landlords tell us is the rent due. We continue to work on process improvements around that. The pre-existing system was itself far from perfect, and we believe the processing times for the UC housing element are about the same as those for local authorities paying housing benefit. According to research by the national organisation for ALMOs—arm’s length management organisations—three quarters of tenants on universal credit were already in arrears before coming on to UC. Nevertheless, we continue to address those issues and we recognise that further improvements can still be made. That includes a dedicated team to handle the processing of rental information for both claimants and landlords.
In Newcastle upon Tyne North, the claimant count has come down by 36% since 2010, but of course we have to continue to support more and more people into work as they fulfil their potential and ambitions. Colleagues will know that implicit consent has been restored to MPs. There are particular sensitivities and difficulties about the breadth with which implicit consent can be granted, given the depth of personal and sensitive information within universal credit to which the individual claimant holds the key, but claimants are able to give explicit consent to advice agencies and so on as appropriate.
I fear that I am out of time. I conclude by saying that we must continue to work together to resolve issues as they arise and ensure a successful roll-out. We are standing on the cusp of historic change in our welfare state—a dynamic and fundamental change that is already transforming lives for the better and will improve many more. This is welfare reform in action—changing the dynamics in the system, making things simpler and ensuring that work always pays, to the benefit of millions.
I am sorry to say that I am not reassured by the Minister’s response to the significant issues with the current system. We are not talking about the principles or the aims of universal credit; we are talking about the serious reality on the ground for people trying to access the support that they are entitled to. The Minister appears still to have his head in the sand. I hope that that is simply because he has not had time properly to address the issues that several hon. Members outlined and he will go away and look at them. These are not just glitches in the system. The consequences are disastrous for the individuals concerned. The Minister did not address the issue of embedding debt in the system and has not taken seriously the impact of the issues that people are experiencing. I am also not convinced about his commitment not to reduce jobcentre staff, given that two of the jobcentres in Newcastle are set to close. This debate will continue.
Motion lapsed (Standing Order No. 10(6)).
[Geraint Davies in the Chair]
Sitting suspended for a Division in the House.