I beg to move,
That this House calls on the Government to pause the roll-out of Universal Credit full service.
I am delighted that we have secured this vital debate on universal credit, given the concerns across the country and among Members on both sides of the House. I am aware that some 90 people have put in to speak, so I will take only a few interventions from both sides of the House. I will try to get through my key points as quickly as I can.
Our motion calls on the Government to pause the roll-out of universal credit while the issues associated with this key social security programme are fixed. I genuinely offer to work with the Secretary of State for Work and Pensions to fix the many and varied issues associated with universal credit. To understand what needs fixing, we need to understand how we got here. When universal credit was first introduced in 2012, it had the underpinning principles that it would simplify the social security system, bringing together six payments for working-age people in and out of work, and that it would make work pay.
My hon. Friend talks about the underpinning principles. Surely, one of those should be that our social security system should not drive people into debt, yet that is precisely what is happening to my constituents who are waiting months for payments.
Absolutely, and I will go on to make those points in a moment.
Getting back to the principles, we supported those then and we support them now. The Government wanted to pilot the implementation of UC, so they introduced a number of pathfinder areas, including my Oldham constituency, and planned a phased roll-out between 2013 and 2017.
My constituency was also a pathfinder, and since the introduction of UC in 2012, the claimant count in my constituency has halved. Does the hon. Lady think the two issues are connected?
There may be many and varied reasons why the claimant count is down, not least the system of punitive sanctions the Government also introduced in 2012.
Newcastle was also a pathfinder constituency. As the local MP, I have seen at first hand the absolute misery and destitution that this system has forced many of my constituents into. Our Newcastle food bank was already the largest in the country, and now it regularly runs out of food as a direct consequence of this system. Does my hon. Friend agree that the Prime Minister’s attitude at questions earlier today showed a total lack of understanding of the impact and of the destitution and suffering of so many of her citizens?
This is a real test for the Government; if there is a genuine desire to make life better for everybody across the country, UC is a key way in which we can respond. I am so sorry to hear about the issues in Newcastle as a consequence of the introduction of UC.
I can report to my hon. Friend that I have had exactly the same experience in my constituency, where people are being driven into destitution by the waits for UC. The local food bank, alongside the citizens advice bureau, has estimated that if this full roll-out goes ahead just six weeks before Christmas, leaving everybody destitute for Christmas day, it will have to collect 15 tonnes of extra food to deal with the demand that will be generated by these changes.
This is the reality that people are facing; this is happening in the areas my colleagues have mentioned, and our concern is that, as this is rolled out to 55 areas this month, the situation will get even worse.
I will give way one last time.
I am most grateful to the hon. Lady, who is being enormously kind with her time. The motion calls for a pause in the roll-out. Is she going to tell us what the Labour party would do during that pause period?
The hon. Gentleman is pre-empting my speech, but I will happily propose exactly what we would like to do in conjunction with the current Government, whose programme this is.
From the start, there were a number of serious design flaws, which the Work and Pensions Committee, of which I was a member, raised in 2012. They included, first, the fact that UC applications would be “digital by default”; in other words, applications could only be made online. There are still several issues with that, not least the assumption that everyone is computer-literate or has ready access to getting online. We all remember the scene in “I, Daniel Blake” where somebody who had not used a computer before was trying to do so, and we saw the real stress and difficulties he found.
I am sorry but I am not going to give way again, as I must try to press on.
Secondly, there were concerns that UC payments would be made monthly, in arrears, and paid only to the main earner of each household, so women, as second earners, are automatically discriminated against in this process; it was also quite a radical change, with rental payments going directly to the household and not the landlord. Thirdly, there were considerable doubts about the use of so-called real-time information, which was meant to ensure that information from employers to Her Majesty’s Revenue and Customs would allow the Department for Work and Pensions to calculate quickly what people in low-paid employment would be entitled to from UC. The reliability and validity of this data exchange was another key concern. I believe there is a DWP RTI issues group, so there are clearly still problems. Finally, the Government said that disabled people would not be financially worse off under UC, but because the severe disability premium payment has not been incorporated into UC, it is an effective loss of up to £62.45 a week for a single person—more than £3,200 a year.
All that was in 2012, but a number of other issues emerged in the following couple of years—universal jobmatch, ballooning costs and of course several delays. One of the most worrying issues revealed in the January 2015 UC regulations was that people in low-paid work on UC will now be subject to in-work conditionality. So, for example, someone who is one of 1 million or so people working on a low-paid, zero hours contract, with different hours from one week to the next, will have to demonstrate to their Jobcentre Plus adviser that they are trying to work 35 hours a week and if they fail to do that to that person’s satisfaction, they can and will be sanctioned. For Members who are unfamiliar with this concept, those people will have their social security payments stopped for a minimum of a month.
Fast forwarding to the 2015 summer Budget, the then Chancellor announced that cuts would be made to the so-called universal credit work allowances, which are how much someone can earn before UC support starts to be reduced. For example, a couple with two children claiming housing costs had their work allowances cut from £222 a month to £192 a month. In addition, approximately 900,000 families with more than two children could not receive support for third or subsequent children.
I am not going to give way again, as 90 people have put in to speak.
The UC equivalent of the family element in tax credits was also abolished. The Government’s equality analysis showed that women and people from black, Asian and minority ethnic communities will be most adversely affected by these work allowances cuts. Let us recall what the principles of UC were and then consider that the Institute for Fiscal Studies stated at the time that the cuts to work allowances meant the principle of making sure work always pays was lost. The Government’s claim that UC is leading to more people getting into work is misleading, as it is based on 2015 data, before the work allowance cuts came into effect.
The current Chancellor’s attempt to redress some of the damage of these cuts by reducing the UC taper rate in last year’s autumn statement has had a marginal effect. Members may recall that he reduced the rate from 65% to 63%, so that for every £1 earned over the work allowance, 63p of UC support is withdrawn. That is a far cry from the 55p rate envisaged when UC was first being developed. On that basis, the Resolution Foundation estimated that some families will lose £2,600 a year because of these cuts.
Will the hon. Lady give way?
I am sorry but I am not going to give way again, as I need to make progress, with 90 people having put in to speak.
This summer, the Library analysis that I commissioned showed the real-terms impacts on different family structures and for different income groups. It found that a single parent with two children working as a full-time teacher will be about £3,700 a year worse off in 2018-19 compared with 2011-12.
So where are we are up to now? The most recent statistics show that there are currently about 600,000 people claiming UC, over a third of whom are receiving support via the full service. The roll-out of UC over the next six months will see the overall case load rise to just under 1 million, which is a 63% increase. On average, 63,000 people a month may start a new UC claim before January 2018, and by 2022 we expect about 7 million people to be seeking support from the programme. We are at a turning point in the Government’s flagship programme, the roll-out of which is currently being ramped up dramatically.
On top of the design flaws and cuts that I have just mentioned, several other issues have emerged. Perhaps the most pressing is the Government’s decision to make new claimants wait six weeks before they receive any support. Four weeks of that is to allow universal credit to be backdated, plus there is an additional week, as policy, and then a further week waiting for payment to arrive. This “long hello”, as some have called it, is believed to be one of the primary drivers of the rising debt and arrears we are now seeing. Citizens Advice reports that 79% of indebted claimants
“have priority debts such a rent or council tax, putting them at greater risk of eviction, visits from bailiffs, being cut off from energy supplies and even prison”.
Will the hon. Lady give way?
I am sorry, but I will not.
Half those in rent arrears under universal credit report that they entered into arrears after they made their claim. What is worse is that many claimants do not even receive support within the Government’s lengthy six-week deadline: one in four are waiting for longer than six weeks and one in 10 are waiting for more than 10 weeks. The Government’s so-called advance payment, which is meant to be available to those in need, is in fact a loan that has to be paid back within six months out of future social security payments. I recognise and welcome the Secretary of State’s announcement about speeding that up, but I will explain later in my speech exactly what we might need to tweak.
As we have heard, the measures I have outlined are pushing people into debt, rent arrears and even homelessness. Last year, the National Housing Federation warned that approximately 80% of tenants on universal credit were in rent arrears, with the six-week delay being attributed as the key cause. A few weeks ago, a nurse came into my surgery. She was a single mum who had transferred from tax credits to universal credit. She had the six-week wait, and as a result the arrears racked up. When she came to see me, she had just been served an eviction notice. As universal credit is rolled out, such stories will become more and more common.
The Mayor of Greater Manchester has warned that rough sleeping will double over the winter if the universal credit roll-out continues without its fundamental flaws being addressed. This is not scaremongering; it is based on estimates by local authorities in which universal credit has already been rolled out. Throughout Greater Manchester, the average arrears for people on UC in social housing is £824, compared with £451 for non-UC tenants. It is already having an impact on rising evictions and homelessness—and that is without even going into what is happening in the private rented sector. In addition, the increase in rent arrears for social housing landlords means that less money is available for investment in housing-stock maintenance or the building of new social housing, thereby adding to the existing housing crisis.
The increase in food bank use is another consequence of universal credit delays. Earlier this year, the Trussell Trust reported that referrals for emergency food parcels were significantly higher in a UC area, at nearly 17%, compared with the national average of just under 7%. The trust’s report also highlighted the impacts on the mental health of people on UC, who were described as stressed, anxious or depressed, as they worried about being unable to pay bills and falling into debt.
Who is most likely to be affected and why? Single parents are particularly vulnerable under universal credit. There are now 65,000 single parents on UC. Gingerbread has described how, through
“error in administration and the structure of the system itself, single parents have been threatened with eviction and jobs have been put at risk”.
Gingerbread told me about Laura, who lives with her two sons, one of whom is severely disabled. Laura had to apply for universal credit when her temporary contract at work ended. She had to wait eight weeks for support, and visited a food bank to feed her children. She was not told about advance payments and was struggling with rent arrears. Reflecting on her experience, Laura said:
“it’s very stressful, single parents quite often have enough stress and worry about money; and other things, bringing up your children to start with and it’s exacerbated by this very unfair, very unjust system”.
With child poverty among single parents forecast to increase sharply to 63% by the end of the Parliament, it is vital that we fix the social security system to ensure that it is working. In a forthcoming Child Poverty Action Group report analysing the cumulative effects of social security changes on child poverty since 2010, the section on universal credit highlights its design issues and, in particular, the detrimental impact on single parents. It states:
“Universal credit was designed to be more generous to couples than single people, with lone parents in particular expected to lose out compared with tax credits. This was a deliberate reaction to the decision, within tax credits, to boost support for lone parents in comparison with couples because of their higher risk of poverty and the greater difficulty of increasing earnings from work if you are a lone parent.”
The report goes on to say:
“Since its initial design, universal credit has been subject to a succession of changes and cuts which have substantially reduced its adequacy overall… As a result, it is now less generous than the system it is replacing, and no longer offers the promise of reducing poverty.”
Universal credit is not just affecting single parents; young families and families with more than two children will also fare much worse under UC. Young families going on to universal credit will be affected by the decision to introduce a lower under-25 rate of the standard allowance in universal credit, even for parents with children. As a result, young families will be at increasing risk of poverty, especially if they have a single earner or a second earner working part time. Of course, among other cuts, limiting the child element of support to only two children leaves families with more than three children worse off as well. The report reiterates that as well as being less generous and actually cutting family income, UC fails to incentivise people into work or to progress in work, which are fundamental principles of UC. Shockingly, it has been calculated that, because of the cuts, universal credit will push a million more children into poverty by 2020, with 300,000 of them under five.
On a point of order, Mr Speaker. The last time that the Leader of the Opposition spoke on this issue, he made a series of entirely unsubstantiated factual claims about housing in Gloucester. Are these further unsubstantiated claims?
Order. That is not a point of order and it is an abuse of our proceedings. I strongly counsel the hon. Gentleman not to make the same foolish mistake again.
I wonder how that intervention will be seen by those people affected by these issues. Some 900,000 working-age adults will be pushed into poverty, while 900,000 children and 800,000 adults will be living in severe poverty.
Earlier, I mentioned the design issues that are affecting disabled people. This week, I heard from someone who has lost nearly £80 a week—a week—because of their transfer to universal credit after they moved house, ending their ESA claim. When UC was first launched, the Government said they wanted to
“simplify the current complex rules which have been prone to error and complex and confusing for disabled people”
and to replace
“seven different premiums with a simpler, two-tier system that focuses support on the most severely disabled people who are least able to work”.
However, subsequent social security changes, particularly the abolition of the UC limited-capability-for-work element from April 2017, have meant that, instead of a net gain, it is likely that there will be a net reduction of support for people with health conditions and disabilities.
Under this Government, we are seeing unprecedented cuts in support to disabled people, with the consequence that more and more disabled people are living in poverty. The number currently stands at more than 4.2 million; this cannot go on. This is exactly what the UN Committee on the Rights of Persons with Disabilities said is causing a “human catastrophe”.
Will the hon. Lady give way?
I am sorry, but I will not. As I have said, I am conscious that 90 people wish to speak.
The self-employed are another group who are adversely affected by the Government’s changes to universal credit. We have seen a dramatic increase in self-employed people in recent years: they now make up 15% of the workforce—5 million in total—and account for 80% of the increase in employment since 2008. But 45% of them pay themselves less than the living wage.
As I have said many times, it is absolutely right that we try to design a social security system that can properly support self-employed people and that recognises the fluctuating nature of the labour market for those workers. Sadly, universal credit no longer does so, after the introduction of the minimum income floor, which is an assumed income for self-employed people, found by multiplying the minimum wage on the assumption that self-employed people are working 35 hours a week. One self-employed recipient who contacted me said:
“This system does not allow for the fluctuations in income that are experienced by the self-employed. Surely an assessment made on a year’s profits would be much fairer.”
They went on to say that universal credit will close down enterprise as a route to employment.
Importantly, the Department for Work and Pensions does not average incomes over a year, which leads to issues around holidays, such as Christmas, when the self-employed may take time off. They will be punished for doing so under the Government’s universal credit system. The Federation of Small Businesses has also expressed concerns, saying that it expects major problems for low-income self-employed people to set in at Christmas.
We need to build a social security system fit for the 21st century and to make sure that all workers, employed or self-employed, are afforded dignity and security as work demands fluctuate. We cannot allow the devastating impacts of universal credit roll-out to happen. I reiterate my genuine offer to work with the Government to address the very real concerns about universal credit, particularly its design flaws, the administrative issues and the cuts.
I welcome the Government’s announcement this morning that the so-called helpline will now be a Freephone line. Given Serco’s appalling performance over the past few years and the profit that it has made from the Government contract, it should be paying for the Freephone lines. It is unacceptable that people on the lowest incomes have been paying money that they do not have on phone calls to find out about their claims.
Action must be taken to improve call handler capacity and competence, so that people making inquiries on their claim are not kept on hold or passed from pillar to post. Another key ask is for alternative payment arrangements to be offered to all claimants at the time of their claims. That includes ending the one-week wait and enabling people to have fortnightly, instead of monthly, payments where appropriate with the option of the housing element to go directly to the landlord. Alternative arrangements have already been made available in Northern Ireland and will be introduced in Scotland, so there is no reason why they also should not be available to people in England and Wales.
We need to look at the advanced payments and make them more manageable. A repayment over six months is still creating huge issues for people on the lowest income.
I am sorry, but I will not give way.
These are relatively straightforward suggestions. I recognise that reinstating the original level of work allowances and reducing taper rates are less so, but if the Government and the Prime Minister are sincere about tackling injustice in this country and making sure that work pays, they must act. Once again, I commit to working with them on this. We must address the poverty and discrimination that universal credit is causing women, children, disabled people and black, Asian and minority ethnic communities now. This will only get worse as universal credit is rolled out.
This country is at a crossroads. Brexit must not blind this Government to other obligations to their citizens. We must all work together in the national interest to avert the disaster that is about to unfold if universal credit is rolled out without fixings its failings. I urge all MPs to vote with their conscience, stand with us and their constituents and pause and fix universal credit.
Today we have seen yet another excellent set of labour market statistics: unemployment is 1 million lower than in 2010 and youth unemployment has gone down by 415,000 over the same period. Underneath those raw statistics lie the work and effort of millions of families across the country who are keen to get on and make the best of their lives: people who are in work but want to earn more, people who are out of work but really want to get a job. Young and old all deserve the opportunity to maximise their potential. That is what universal credit is all about.
Will the Secretary of State give way?
Let me make a little progress.
When it comes to universal credit, there is much talk about supporting the principles behind the reform, and I welcome that. Before turning to the issues raised by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams)—and I will be taking plenty of interventions—I think it would be helpful to the House to articulate what those principles are.
The fundamental purpose of universal credit is to assist people into work. It is through work that people can support themselves, obtain greater economic security and progress in life. Universal credit does that by making work pay.
Let me finish on the principles, and then I will take plenty of interventions.
We inherited a welfare system that puts in place barriers to people fulfilling their potential. If those on jobseeker’s allowance do more than 16 hours of work, they must go through the disruption of stopping their benefit claim only to start another. Many on employment and support allowance can be faced with a choice between financial support or work while we know that many thousands would like, and would benefit from, both. Once a person is in work, they are all too often caught by the hours rules in tax credits. Universal credit cuts through that by taking six different benefits and replacing them with a single system: a system where claimants receive tailored support to get them into work; a system where claimants have to deal with only one organisation, not three; and a system that ensures it always pays to work and always pays to progress.
It is not the principle, but the practicality that is at issue. [Hon. Members: “Ah!”] The principle of getting people back into work is something that we on the Labour Benches accept. The citizens advice bureau, the Trussell Trust and even John Major are saying that universal credit should be delayed, because it is increasing poverty and leading to debt and rent arrears. Are they wrong?
My argument is that we should not be pausing this. May I just say that I welcome the clear expression of support for the principle of universal credit? That is helpful. The case I will make today is that the principles lead us to a design that is focused on making work pay. It is diminishing the differences between being out of work and being in work, and can make a significant difference.
I give way to my right hon. Friend—[Interruption.]
The hon. Member for St Albans (Mrs Main) has just been promoted. The Secretary of State needs to gesticulate whom he means with greater clarity.
I thank the Secretary of State for that promotion. I look forward to receiving it in the post.
Is the Secretary of State any more aware than I am of the topic of this debate? Yesterday, the Opposition wanted to fix universal credit. Today, the word “fix” has been dropped. It seems that the Opposition want to pause but not fix. Has he any greater awareness of this matter?
That astuteness demonstrates why my hon. Friend should become my right hon. Friend sooner rather than later.
It is a very revealing point. There is no real attempt to fix this. This is about pausing it and wrecking it.
Has the Secretary of State seen the survey of 105 local councils, which showed that of claimants who claim universal credit, over half of the council tenants are in rent arrears compared with only 10% of those on the old housing benefit? Does that not show that this system needs to be paused and fixed?
Part of the issue is that that is not comparing like with like. The right hon. Gentleman will understand that the selection of people who will be on universal credit will be of a different group than the housing benefit population as a whole. [Hon. Members: “Why?”] The reason is that in many cases, going on universal credit involves a change of circumstances, and that change of circumstances may in fact be a reason why people are in arrears. [Interruption.] May I just make this point? I know that the right hon. Gentleman has concerns about how we address the issue of the early period, so I will say a little bit more about it. We are seeing improvements in payment timeliness, and people are getting more support early so the reasons for increased rent arrears will not necessarily apply.
I want to make this point about what universal credit does. The work done within universal credit to give people the support to prepare for work can be too easily missed from debate.
I will just make a little bit of progress.
Universal credit gives a person a work coach, who provides personalised support, helping them to stay close to the labour market and overcome barriers to work. A universal support package provides people with assistance to build confidence and competence with IT, manage their universal credit account online and access online job search facilities and training. Universal credit makes being out of work more like being in work, because people are paid monthly, as 75% of employees are, and because it is paid directly to tenants instead of to their landlord. It also stays with recipients during the transition from being out of work to being in work.
The Secretary of State makes a really important point about the unemployment figures and the importance of getting people into work. Will he join me in congratulating my constituency, which has one of the lowest levels of unemployment—the sixth lowest—in the country, with only 375 people unemployed or claiming unemployment benefit?
My hon. and learned Friend is right. We need to build on the progress that has been made in her constituency and, indeed, generally across the country, and further assist people into work.
I will give way to one of my predecessors as Secretary of State.
The Secretary of State is being very generous with his time. Did not the shadow Secretary of State rather give the game away when she denied any link at all between universal credit and the increase in employment levels? Since 2010, the Labour party has set its face against welfare reform. In 2010, Labour Members ran to the barricades to defend an outdated system that trapped people in poverty and worklessness for years.
My right hon. Friend is absolutely right. This is yet a further example of the Opposition turning their back on reforms. I listened to the remarks of the shadow Secretary of State—
Will the Secretary of State give way?
I am just making a point about the speech we just heard from the shadow Secretary of State, who has set her face against any form of conditionality in the benefits system, as far as I can tell. She fails to appreciate that the best way of helping claimants is to get them into work. That sometimes requires a change of behaviour, and a degree of conditionality within the system is required to ensure that people change their behaviour so they can make progress.
On this side of the Chamber, we live in the real world of our constituents. People suffering from motor neurone disease came to see us in Westminster yesterday to say that on top of the agony of their disease, they faced the indignity of fighting for their full entitlement under PIP. Today a landlord came to see me in my office, saying that he will never again let to tenants on universal credit, and a single mum told me that she is desperate because, with roll-out just before Christmas, she and thousands of others face a bleak Christmas. Does the Secretary of State begin to understand—
Order! I am sorry to have to shout, but the hon. Gentleman, though he speaks with great force and eloquence, took too long. We must have shorter interventions, as it is not fair on others.
Let me turn to the important point of claimant commitment.
Will the Secretary of State give way?
I will give way, but not for a moment.
Throughout this period, claimants have a flexible, clear and tailored claimant commitment so they fully understand their responsibilities. The commitment supports and encourages them to do everything they can to move into or towards work, or to improve their earnings. The only thing we ask is that claimants meet reasonable and agreed requirements that take into account their individual circumstances and capability, including mental health conditions, disability and caring responsibilities. I hope that this approach to benefit conditionality will have the support of both sides of the House, including the hon. Member for Wallasey (Ms Eagle).
The Secretary of State must surely realise that the way in which the system is being administered is leaving people penniless and possibly destitute. He must address that point. The Government are rolling all the six benefits into one; if that is then not available to people for six weeks, there are people who cannot afford to survive in that time. The loans, which have to be paid back, are not an adequate response. Will the Secretary of State admit the human suffering that is happening in all our constituencies and deal with that particular point?
Let us be clear: if people need support under this system, they do not have to wait for six weeks. [Hon. Members: “They do!”] They do not have to wait for cash in their pocket from the state because they can get an advance, which is normally paid within three days. If someone literally does not have a penny, they can get that money on the day. There is a responsibility on all of us as constituency MPs, when we meet our constituents who face difficulties of this sort, to inform them of the availability of advances, not to scare them with the belief that they have to wait six weeks when they do not.
The points being made by Opposition Members are disappointing in one particular way. There is a strong responsibility on all of us as Members of Parliament to help our constituents when they get into problems, rather than trying to weaponise them politically. One way this could be done is to encourage our largest housing associations to have an implant inside the Jobcentre Plus so that at the very moment somebody goes on to universal credit, the housing association is there and able to make sure they get the necessary advance so that they can pay their rent. Does the Secretary of State agree?
My hon. Friend makes a good point. Co-operation between housing associations and the Department for Work and Pensions is an important part of improving the service. We are seeing improvements in how that operates and I hope it continues to improve further.
My constituency was a pilot scheme for universal credit, and I regularly meet the jobcentre and the citizens advice bureau. The important point is that there were teething troubles in the early days, but people can now get a loan on the day. The worst wait is seven days, depending on the individual’s circumstances. The problem—if there is a problem that has to be addressed—is how the loan is paid back. The repayment cap is currently at 40% of payments. Would the Secretary of State look into a 10% rate instead, to help the system flourish even further?
The advance is typically paid back over six months, so it is essentially a deduction of around 8% from universal credit payments for the first six months. The figure of 40% takes into account all deductions that may conceivably apply in such circumstances.
I have given way numerous time already, probably a multiple of the number of times the shadow Secretary of State gave way. I do not want the House to miss this point: universal credit 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 dependency, take control of their lives and move into work. Our analysis shows that 250,000 more people will be in employment as a result of universal credit when it is fully rolled out. Universal credit is picking up from a deeply flawed system and striving to solve problems that were previously thought unsolvable.
If the Secretary of State’s intention really is not to cause hardship and distress, why will he not get rid of that automatic six-week wait? Many people still do not know about it. Many do not know to go to their MP to seek solutions. Get rid of it. What he is talking about is a loan, which has to be paid back over six months and which many people are not eligible for. The point is that the way the system is designed is making people fall into hardship, and it is deliberate. It is not an accident. It is absolutely an integral part of the design. Change it.
I will come back to the six-week period.
We have to remember that we have inherited an old system, in which complexity and bureaucracy often served to stifle the independence, limit the choices and constrain the outlook of its claimants. The disincentives in the legacy system to work or earn more have been removed, along with the complex hours rules and cliff edges.
I have to make some progress.
Claimants now no longer need to switch between benefits if they move in and out of work, so they are free to take up short-term and part-time work without worrying about being worse off or their claim ending. It is working: our research shows that compared with people in similar circumstances under the previous system, universal credit claimants spend more time looking for work, apply for more jobs, take up jobs that they would not even have considered previously, and take on more hours or extra jobs. That is not an abstract discussion; this is real people’s lives being improved because of universal credit.
Eighteen months ago, I visited Radian, a housing association in my constituency. Radian expressed to me and to our hon. Friend the Minister for Employment concerns about the impact of universal credit on tenants. Eighteen months later, those people are in work, paying the rent and working with the housing association. The outcome is positive. Labour Members are simply scaremongering.
I am grateful to my hon. Friend for highlighting the reality. This is not an abstract discussion; we are discussing real people’s lives.
Thanks to a Conservative Government, we now have almost full employment in this country. For a number of people who claim unemployment benefits, their mental health is a barrier to getting work. What assurances can my right hon. Friend give us that the universal credit system will either help people with low-level mental health conditions to get back into work, or give them the support they need for their future?
My right hon. Friend makes a good point. I was about to give an illustration of the way universal credit can work involving a claimant with learning difficulties, who was out of work when he came to the jobcentre. His work coach provided tailored support, building his confidence and capability. That man is now in work. He told us that he is proud of himself for getting into work, and that he did not think it would have been possible without universal credit. He is now looking forward to the future. That personalised support, tailored to individual circumstances, is much more widely available.
Let me give another example. A university graduate had not previously had a job but was desperate to get into work. Her work coach helped to build her skills—interview skills and application writing—and she was soon successful in gaining a 16-hours a week job. When she was offered overtime, the work coach supported the claimant flexibly, rescheduling her Jobcentre Plus appointments so they did not clash with her new hours. The claimant could accept the overtime, confident that she would remain on universal credit and continue to be supported by her work coach.
Those are true testimonies of the powerful potential of the reform to change lives for the better.
Does the Secretary of State agree that one of the best ways to help people into work and support them is to deal not only with the six-week wait, but with the fact that—according to Citizens Advice—one in three people now wait longer than six weeks, and one in 10 wait longer than 10 weeks?
Let me deal with the points on the waiting period and timeliness. I acknowledge the concern. Returning to the intervention from the hon. Member for Brighton, Pavilion (Caroline Lucas), we have to remember that a waiting period is fundamental to the structure of universal credit, which pays people monthly, mirroring the world of work. Universal credit also automatically adjusts payments to take account of a claimant’s income in a particular month, meaning that a claimant will always be better off in work. To do that, payments necessarily have to be made in arrears.
We know that some people cannot afford to wait six weeks for their first payment, which is why we have advances that provide those in financial need with up to their first universal credit payment. Increasing numbers of people claim that; the numbers from July show that the majority of claimants did so. Claimants who want an advance payment will not have to wait six weeks; as I said, they will receive the advance within five working days, and if someone is in immediate need the advance can be paid on the same day. I recently improved the guidance to DWP staff to ensure that anyone who requires an advance payment will be offered it up front.
I will make a little more progress before giving way again.
Of course it is important that we get people the right money at the right time. As UC full services roll out, there have been significant improvements in verifying claims and making payments on time. Our latest data show that 80% of new claimants are being paid in full and on time; 90% receive some payment before the end of their first assessment period; and, taking into account advances, 92% of new claimants receive some support within six weeks. More than 1 million claims to UC have been taken. The live service is available in every part of the country and the full service version is already in 135 of our jobcentres for new claims across all claimant types.
The Secretary of State says that advances are typically paid within three days. Of course, an advance in crisis funding is an admission that the system is failing, but aside from that, what evidence does he have for saying that payments are made within three days? The answer to a written question that I received this week shows that the DWP is not collecting those data.
For a start, it is not crisis funding; it is an advance giving people flexibility in when they receive their universal credit payments. Our commitment is to deliver within five days, and my understanding is that typically payment is made within three days. We are providing support to people earlier. I acknowledge the concerns. I have seen the hard cases of people who have apparently gone weeks—sometimes months—without support. What we are saying is that they can get an advance quickly, as long as we have verified their identity.
May I back up my right hon. Friend, drawing on work I have done in my area and on discussions with citizens advice bureaux? When people have needed advance payments, they have received them incredibly quickly, within two or three days, and the jobcentre staff tell me that universal credit is helping them to help people to get into work. Does he share my frustration at hearing so much negativity from Labour Members and never any positives?
I certainly do. This is an important matter and strong views are held in all parts of the House, but I urge right hon. and hon. Members to engage with their local jobcentres. When they talk to jobcentre staff, many Members hear what my hon. Friend just described—that the universal credit system is delivering for people, giving them the opportunity to get jobs. That is exactly what we are determined to do.
Universal credit is working and the roll-out will continue—to the planned timetable. We are not going to rush things. It is more important to get this right than to do it quickly. At the moment, of the total number of households that will move on to universal credit, we are currently 8% of the way there. By January, it will be 10%. Across the country, we will continue to improve our welfare system to support further those who aspire to work.
I have given way numerous times. I am conscious that, as the shadow Secretary of State repeatedly said, 90 speakers want to get into this debate, and I have spoken for nearly half an hour, which is more, I am sure, than the House can endure.
We are under no illusion but that we must continue to work together to resolve issues as they arise and ensure a successful roll-out. I want to improve the system. I want constantly to refine the system. I want to make changes where necessary to test and learn and improve. I am determined to do that. I have made an announcement today along those lines about telephone lines.
We all welcome the Government’s concession on the premium phone line, but I met the CAB on Monday and it tells me that advisers are sometimes waiting up to half an hour to get through. Would the Secretary of State consider an MP-type hotline for advisers from the CAB and other welfare advisers?
First, we have never had a premium line; it is the same sort of system that one of the hon. Gentleman’s constituents would find if he called him and booked into a constituency surgery. It has never been a premium line, but we are changing it. On the average waiting times, I think that in September it was five minutes and 40 seconds. As for his particular proposal, let me take that away. Very often the CAB needs to call the local jobcentre rather than the national centre, because if it wants to deal with an individual case, dealing with the jobcentre would be more helpful.
I thought that there was a helpline for MPs to deal with all our constituents’ cases—unless it is a courtesy extended only to North Dorset.
My hon. Friend is absolutely right, but to be fair to the hon. Member for Kingston upon Hull East (Karl Turner), I think that he wants to extend the helpline that we have or offer a similar service to advisers. As I say, I will look at that, but very often advisers need to contact the local jobcentre.
I have spoken for a long time and I want to push on.
The approach that we are taking is to test, to learn and to improve, because we are delivering a really important and fundamental change, moving towards a more dynamic system that is already improving lives and has huge potential to do more.
Let me say something about the approach we have heard from Labour Members. We have adopted, I believe, a responsible approach. Of course, there are legitimate questions to ask, and no Government can object to scrutiny, but let us not pretend that that is what we are getting from Labour Members. What we are hearing today is not constructive opposition—not a plan to reform universal credit, but an attempt to wreck it. It is an attempt to paralyse a policy that will help 250,000 more people get into work and to block a reform that will increase opportunity. It is an attempt to play politics but with no attempt to set out a real alternative. I say to my colleagues, well, let them do that, but we will proceed. We will address the historical failures of our benefits system, we will increase opportunity, and we will deliver a welfare system that puts work at the heart of it.
Back in 2010 when universal credit was first mooted by the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), the SNP gave it a cautious welcome. My predecessor as the SNP’s social justice spokesperson, Dr Eilidh Whiteford, said at the time that
“some of the measures set out today—particularly the universal credit—are very welcome”.
The initial premise of a simplified social security system streamlined with one payment was a good idea. The SNP still supports that idea.
However, successive Chancellors and Work and Pensions Secretaries have not just salami-sliced the idea; they have hacked it to bits as £12 billion of cuts need to be found from somewhere—anywhere—within the DWP. The fast-fading dream of a budget surplus meant arbitrary cuts to departments across Whitehall, but particularly the DWP, such that indiscriminate and unco-ordinated cuts were required. Cuts to tax credits, to the work allowances, to employment support allowance and to housing benefit—all component parts of universal credit—have undermined the new system. Indeed, having initially welcomed the premise behind universal credit, Eilidh Whiteford was one of the first to warn about the problems we see in its roll-out today. I wish she were standing here today for that reason.
Yesterday a group of very prominent Government Back Benchers met the Prime Minister and the Secretary of State and presented them with a set of areas which the Government could act on quickly as the roll-out was going on, and which would immediately help people and improve universal credit. Let me be clear: we do not want to see universal credit scrapped; we want it fixed and improved. The improvements suggested yesterday were cutting the automatic minimum wait from at least six weeks to a guaranteed four weeks, making payments on a fortnightly rather than a monthly basis, and doing more on advance payments to make them part of the award and therefore not recoupable as a loan. Those would be very welcome steps. None of those changes would break the bank. All of them would help. All of them would make a meaningful change to people’s lives. Those changes are the focus of what SNP Members and the Scottish Government have been calling for over the course of months and years, so of course we would have supported them.
The suggestion that I would like to add to that list—I wonder if the hon. Gentleman agrees with me—is that the Department might start to monitor whether people have requested split payments, which were put in place by campaigners like me to ensure that victims of domestic violence can access any of their finances. At the moment, under the current system, they have to admit it in the jobcentre, often in front of their partner.
I thank the hon. Lady for her intervention. That is one of the flexibilities that the Scottish Government are going to be using, so yes, we absolutely support it. Indeed, I was about to go on to some of the areas where we would want the Government to go further.
We want the Government to address single household payments; to reduce the 63% taper rate, which far exceeds the top rate of tax; to scrap the two-child tax credit limit and the rape clause; to look again at cuts to housing benefit; to look again at employment support; and to look again at the work allowances. I understand why the concerned Tories chose the issues they did—because they are easy and quick to do without costing much money—but it appears that their pleas have fallen on deaf ears, at least for now. I suspect that if the Government abstain this evening, again, it will be only a matter of time before changes have to be made—so why not do it now? If the Government are abstaining to play for time until the Budget, what happens with the areas about to experience roll-out over Christmas? The Government must commit to fix this now.
Does the hon. Gentleman share my concern at learning about my constituent who suffers from severe mental health problems, failed a PIP assessment, and was told to claim universal credit? He has a sick note up until the end of December but was made to sign a form advising him that he will take any job. The sick note was dismissed by the work coach, who said that if he did not sign he would be sanctioned.
That is another appalling constituency case of which we all have many. I am about to raise one myself.
My constituents had universal credit rolled out last November, and we have been bearing the brunt of it since then. The only measurable difference we have seen is that food bank referrals have gone up by 70%. People cannot wait for the Government to make up their mind on how they are going to fix this system.
I wholeheartedly agree with my hon. Friend, as do the expert charities and organisations involved in alleviating food poverty. The Secretary of State will, of course, claim to have listened to concerns and made a concession by apparently reducing the time taken to process advance payments and crisis loans. Leaving aside the point that I have already made that for many, myself included, the very fact that these advance payments exist highlights that universal credit is failing, I struggle to see what has changed since his announcement. I know from my written parliamentary question this week that there is no data available on how long the claims took to process previously, but my suspicion is that it will not be too dissimilar to before the supposedly big concession in the Secretary of State’s Tory conference speech. I do not think that anything has really changed.
It is important to understand and address all the unintended consequences of universal credit. Does the hon. Gentleman agree that it is vital for the Government to talk more to local authorities, which are often on the receiving end of people in crisis—those who have been made homeless or who are struggling to pay for food for their families? As an illustration, universal credit claimants make up 15.4% of all local authority tenants in my borough, but they account for 49% of all tenant arrears. That is not unusual.
I agree, and I think it is good for agencies to talk to each other to ensure that the system works as smoothly as possible.
In spite of the concessions and potential changes, and in the full knowledge of the evidence of the harm that universal credit is doing to our constituents, the Government are determined to press on. As the House of Commons Library briefing points out, the problems include
“financial hardship and distress caused by lengthy waits before the first payment of UC is received, compounded by the 7-day ‘waiting period’ for which no benefit is paid; some, particularly vulnerable claimants, struggling to adapt to single, monthly payments in arrears; inflexible rules governing Alternative Payment Arrangements such as direct payment of rent to landlords;”
and
“increases in rent arrears, with serious consequences not only for claimants but also for local authorities and housing providers, as a result of exposure to greater financial risk”.
That is why the Scottish Federation of Housing Associations has circulated a briefing ahead of this debate in support of a pause and fix of universal credit. In addition, homelessness claimants have been unable to get help with the full cost of emergency temporary accommodation.
The point that the hon. Gentleman makes about the impact on social landlords and housing associations is absolutely correct. We have not yet seen the full roll-out in Cardiff—it is not due until the new year—but I have been contacted already this week by social landlords who tell me that average rent arrears are as much as £500 for universal credit claimants, and that some have had to wait as long as three months to get their payments in place.
That is one of the most baffling areas, and one of the easiest for the Government to reform. It is causing untold stress to social landlords and to our constituents, who are being made homeless as a result of a massive rise in evictions.
Does the hon. Gentleman accept that the breaking of the system has gone too far when organisations such as the Greater Manchester Law Centre refuse to support universal credit, on the basis that it results in further adversity and punishment for vulnerable people?
Yes, absolutely. The Trussell Trust has reported a 17% rise in food bank aid in areas in which universal credit has been rolled out, which is double the year-on-year rise in the rest of the UK. There is, therefore, a direct correlation between the roll-out of universal credit in its current form and people living in food poverty. That cannot and should not be ignored. Citizens Advice in East Lothian, where UC has been rolled out, says that more than half its clients on UC are £45 per week worse off. The third of clients who are better off are up only 34p a week. Citizens Advice Scotland says that rent arrears are up 15% in UC areas, compared with a 2% drop everywhere else in Scotland. The DWP’s own figures show that one in four UC claimants wait longer than six weeks—some of them up to 10 weeks—to receive a payment.
The SNP has been warning about these issues for years. My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) met the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), who was then the Under-Secretary of State for Scotland, on 14 March 2013. My hon. Friend was, at the time, the leader of the Highland Council, which was one of the first areas for roll-out. Nothing has been done. The warnings from Highland have been ignored, despite the roll-out being designed to allow improvements to be made as it progressed.
Where universal credit is currently in operation, rent arrears have spiked, because housing benefit is no longer paid directly to the landlord and people are not getting their money on time. Food bank need has grown because of the minimum six-week wait for payment. In-work poverty is rising as new work benefits start to become sanctionable, and the incentive to work is removed by the cuts to work allowances.
Of course, the DWP has claimed, and will claim, that universal credit is motivating people into work, but that is not true on the scale that it would wish us to believe from its rhetoric. The DWP’s own figures show that for the 2% of jobcentres with UC, there has been a 3% uplift in employment rates. That accounts for all the factors that contribute to people finding or staying in work. Are the rises in food bank use, rent arrears and in-work poverty really worth a 3% uplift in employment, when many of those jobs are precarious, low-paid and unsustainable? The DWP must look again at cuts to work allowances to really make work pay, cut in-work poverty and allow people to get on. The roll-out is supposed to allow the DWP to adapt where things are going wrong, and to fix the problems. Why, then, are the Government not listening to their own Members, to the expert charities, to the Scottish and Welsh Governments and to constituents?
On the subject of listening to constituents, the hon. Member for Moray (Douglas Ross) is failing his constituents by failing to be here to take part in a potential vote on this issue, which will impact on thousands of his constituents and a huge proportion of children in his constituency. Normally, Whips give slips for votes or business days so that MPs can take part in important constituency events or travel with Committees. The Government Whips appear to have slipped the hon. Member for Moray so that he can run the line at a football match in Barcelona. Far from standing up for his constituents, who would get sanctioned for not turning up to a work-related meeting—
On a point of order, Madam Deputy Speaker. Is it appropriate, in a debate about universal credit, to talk about the absence or otherwise of a particular Member of Parliament?
I allowed a passing reference to the hon. Gentleman, because I understand from exchanges at Prime Minister’s questions that the hon. Gentleman in question had already been informed by colleagues of the hon. Gentleman who currently has the floor that his name might be mentioned in this context today. I have allowed a passing reference; that is all. I think we have had enough about the hon. Member for Moray.
To be fair, Madam Deputy Speaker, we have all had enough of the hon. Member for Moray. It is worth a passing mention, because the Moray food bank is also concerned about the fact that the hon. Gentleman is not here today, for the very reason—
Order. We will return to the subject of the debate.
At the start of the year, Mr James Moran from Harthill in my constituency qualified as an HGV driver and managed to find work on a zero-hours contract as a driver while also receiving universal credit—exactly the sort of scenario under which universal credit was supposed to work better. Not long after gaining employment, however, Mr Moran was sanctioned, despite being in employment. As he started the process of appealing the sanction, he suffered a stroke, which meant that he was no longer able to work as a driver. As the sanction was still in place, he returned home from hospital with no means of receiving an income. Despite getting some help from his elderly parents, Mr Moran struggled with no money whatever for more than a month. He then suffered a second stroke. Mr Moran has advised me that the doctors who treated him in hospital at the time of his second stroke admission told him that the low blood pressure that caused the second stroke was almost certainly caused by malnourishment. That malnourishment was a direct result of a DWP sanctioning error, forcing Mr Moran to live without an income—to live on fresh air.
I wrote to the Secretary of State about the case on 1 September and have repeatedly chased his office for a reply, but I have received nothing in return to date. The six-week minimum wait appears to be built into the Secretary of State’s correspondence turnaround as well. I do not take that personally, because I gather from press reports that the Chair of the Select Committee on Work and Pensions has had similar problems with getting the Secretary of State to put pen to paper. Perhaps he will now chase a reply.
The revelation last week that our constituents on universal credit had to pay 55p a minute was a further dent to the public’s confidence in this Government’s handling of universal credit. It should not really have been much of a revelation, as my hon. Friend the Member for Glasgow South West (Chris Stephens) has been raising the telephone tax issue for months—and what a win for my hon. Friend this morning, as, following his ten-minute rule Bill in February, the Government have finally announced that the phone line will be free. But why must we wait until the end of the year for all telephone charges to be scrapped? The Government should bring in that welcome concession now.
Did any SNP Members, when they raised this issue, ever point out that there was a call-back service?
Yes, we did. The hon. Gentleman’s intervention completely misses the point. [Interruption.]
Order. Why are hon. Members shouting?
It is little wonder that the Government have moved. We all watched in horror as the Chief Secretary to the Treasury was put up to defend charging people with no income—living on fresh air—55p a minute to get help and answers about why their payment had been delayed. She told viewers of the BBC’s “Daily Politics” to go to their local jobcentres instead of lifting the phone to the DWP—the same jobcentres her Government colleagues are shutting. After being pressed time and again by Andrew Neil, the Chief Secretary, who has quite a bit of influence over financial matters in this country, could neither defend nor explain why people on zero income were paying more to access help than people under investigation for tax fraud, although the irony appeared to be lost on her.
The idea that this concession has been made to appease the Opposition or just a few concerned Government Back Benchers is of course nonsense. This morning’s concession was made for no other reason than to try to deflect attention from the fact that this Government do not carry the support of their own side of the House, never mind of the House in its entirety. It is a red herring to divert press and media coverage away from the rebellion on the Government side of the House.
In conclusion, I return to the other areas on which the Government could act now at little cost, but which would benefit so many people. In doing so, I wish to appeal directly to Tory and Democratic Unionist party Members who have been working hard behind the scenes to try to get the Government to shift. Tory MPs have raised this issue with the Prime Minister, and DUP MPs have signed early-day motions consistent with the motion. The appeals have been made, the case has been made and the evidence is there for all to see: universal credit in its current form is failing those it should be helping. We all want this system to work, which is why I have done what I can to help those on all sides to make this case.
The time has passed for walking by on the other side. It is crucial that we vote tonight to say to the Government, “You cannot just ignore this any longer. You cannot plough on regardless. You must act, and act quickly.” Yesterday, the Prime Minister and the Secretary of State met concerned Tory MPs, who made suggestions that would garner support across this House and make a major difference to people on universal credit. It is crunch time now. What are Ministers and concerned Tories to do now? We have an opportunity this evening to make a real difference. That is what we all came into politics for—to make a real difference, and to see a problem and to fix it.
The Government, when given a way out of this entrenched position, appear to have chosen to plough on, turning their face against reasonable offers, in the face of the evidence of destitution. I say to the DUP and to Back-Bench Tory MPs, on behalf of their constituents and mine in Airdrie and Shotts, “Don’t give up the powerful position you find yourselves in tonight. Take the opportunity to force real change, send a message to the Government that they know they cannot ignore and vote for the motion to fix universal credit.”
I rise to support my right hon. Friend the Secretary of State, who I thought made an excellent speech. I congratulate him on the courage and the spirit in which he produced his commentary against quite a lot of what is really scaremongering about the way in which the system has been designed.
First and foremost, the point I would make about universal credit is that it was designed to simplify the system, as well as to get more people into work. The second but very important element is that universal credit is about dealing with the very great difficulties of identifying those people—the minority, admittedly—who need universal support and then, with councils, providing them with help on debt counselling and getting them into the banking system in order, basically, to get them ready for work. Until now, those people have by and large been written off and forgotten about in a complex system—disjointed between councils and jobcentres—that did them no favours and provided them with no support. That is what we were trying to get rid of and believed we were actually getting rid of.
Will my right hon. Friend give way?
I recognise that time is limited, so I will limit the number of times I give way.
Universal credit is not just about getting people into work; it is actually about changing lives so that those people are ready and better able to enter work. Why are there monthly payments? The very simple answer is that over 80% and rising of all work is paid monthly, and the figure will soon be close to 90%. That means that if people are not ready, able and prepared to pay bills and deal with their money in monthly periods, they will never survive in the world of work, as has happened to many people crashing out of work.
Will the right hon. Gentleman give way?
I will give way to other Members in a minute, but let me make a second point. When it comes to housing, why do we want people to pay their rent, rather than always have it paid for them directly? There is a simple answer. All too often, housing associations and local authorities receive the money directly, but then do very little for the tenants. They often know very little about their tenants, and they quite often care even less about their lives. The result is that many tenants run up arrears because nobody bothers to get involved.
I will give way in a minute.
That is why universal support—now bringing in councils—will identify such people and help them. That is the purpose of universal credit.
Was my right hon. Friend as surprised and disappointed as I was, during Prime Minister’s questions, to hear this policy described and characterised as “calculated cruelty”? There is nothing cruel about getting more people into work. There is nothing cruel about encouraging more people to work more than a mere 16 hours. There is nothing cruel about simplifying an overly complex system. The cruelty is trapping people in a lifetime of benefits.
I thank my hon. Friend for that intervention.
The right hon. Gentleman has explained the theory of the four-week delay, but does he accept that that theory simply does not work for the very large number of people who are still paid weekly?
It is not a theory, but I will come on to that in a minute. The right hon. Gentleman and I have had plenty of conversations and discussions about the structure of this, and I want to take him up on that point.
I want to make the point, which is not often referred to by Labour Members, that the whole nature of the roll-out was deliberately set so as not to repeat the grave mistakes made when they rolled out tax credits and other benefit changes.
Will the right hon. Gentleman give way?
No, because I am conscious that others want to speak, but I will come back to the hon. Gentleman in a minute.
I recall that my surgery was full of people who, under the tax credit changes, found they had no money at all. When Labour rolled out tax credits in a big bang, over 750,000 people ended up with no money at all. Since then, the thresholds have had to be raised dramatically to get money to those people.
Will the right hon. Gentleman give way?
I will give way in one second.
The roll-out of universal credit has been deliberately designed—it is called “Test, learn and rectify”—so that, as it happens, we can identify where there are issues, rectify them and then carry on rolling it out. I want to give an example of why stopping the roll-out now will not work.
One area that we discovered early on is that landlords were simply unaware of who was on benefits. As a result of all that, arrears would be racked up, but they did not know they could get that stopped and have direct payments made. That will be changed in the next stage of the roll-out, because a portal between landlords and the service centre will allow them to establish that immediately. Unlike the local housing allowance, under which people ran up huge levels of debt, but reset slightly and carried on, universal credit allows them only a two-month period of debts before they go on to direct payments. That critical change will be one way of resolving the problem.
It is worth reminding the House that the former Secretary of State resigned because of the cuts being made to universal credit. I am puzzled about why he does not think it is a good idea to implement the potential fixes being suggested during the roll-out.
I will come to that. The hon. Gentleman should not worry—I will not resile from why I resigned.
Too much of the debate has been based on evidence that is months old, when rectification has taken place and changes have been made. Let me give an example that has not been mentioned. The mistakes in tax credits and housing benefit mean that more than 60% of those coming on to universal credit already carry debt and rent arrears. Universal credit is identifying those people and having to clear up the errors. That is an important point. Before universal credit, too many people were left to get on with their lives and get deeper and deeper in debt.
My right hon. Friend and I are about the same age. Does he share my concern that anyone who is younger than us and listening to the debate might labour—no pun intended—under the misapprehension that, before the election of a Conservative Government in 2010, the previous system was perfect, when it has been bedevilled by flaws for decades? That is why this simplified system, when all the bumps have been ironed out, is welcome.
I am grateful to my right hon. Friend, who has borne the years better than me. However, I will do anything for a kind look—[Laughter.] Particularly from my right hon. Friend.
It is interesting that, in the past 24 hours, the Joseph Rowntree Foundation has made the following statement:
“Universal credit has the potential to dramatically improve the welfare system, which is fragmented, difficult to navigate and can trap people in poverty.”
It went on to say that the system will help people
“transition into work and will respond better to people’s changing circumstances.”
I agree. It would have been nice if the Opposition had started their debate by being clear and positive about how and why universal credit can change lives.
The point about test, learn and rectify is that it does exactly that. My right hon. Friend the Secretary of State made many points in his excellent speech about the changes that are already beginning to happen. For example, some of the rent arrears are beginning to come down and the portal will help enormously with that.
However, I ask my right hon. Friend about universal support, which is the critical other bit of universal credit that no one has mentioned. It allows us to pick up the pieces around universal credit and deal with them on a human basis. Universal credit flags up when somebody has a debt problem and when they are running into arrears. Universal support is vital to work directly with them, using councils, jobcentres and all the other agencies, and hub up around them to help them change their lives on the basis of knowledge about how to pay their bills, their banking facilities and their debts. I ask for reassurance in the winding-up speech that Ministers will put in the extra effort, focus—and money, when necessary—to ensure that universal support rolls out successfully alongside universal credit. That is critical.
The right hon. Gentleman seems to acknowledge that universal credit has not worked for everyone, so does he agree that it has been almost as bad for some of those affected as online reviews of his novel, “The Devil’s Tune”? Comments include: “frighteningly bad”, “rubbish”, “utter drivel” and “hilariously awful—an outstanding compendium of bottomgravy”.
I thought that was a reference to the hon. Gentleman’s speaking ability in the House.
Universal credit is a huge driver for positive change that, as the Joseph Rowntree Foundation said, will not just get people into work quicker, but help us identify those in deep difficulty and change their lives. That is the critical element that I hope will unite the House on what universal credit is all about.
We should not stall universal credit because doing so would damage it. Changes need to be made, and the problems that have been discovered need to be rectified as we move forward. The way that the system is being run is therefore right.
I direct my right hon. Friend the Secretary of State to some of my earlier comments. As I said, I hope that the Chancellor will look again the way in which financing for the work allowances has been reduced. I would like that to be changed. My right hon. Friend made a very good point when he said that we keep what needs changing constantly under review. The issue around waiting days is critical—I know that he will consider that and see if the evidence stacks up for whether changing that would make a major difference.
I congratulate my right hon. Friend on moving swiftly to ensure, as was always the intention, that jobcentre staff can pay out the advances on the day or within the week and, more than that, notify every would-be recipient of universal credit that they are eligible to receive them. That will dramatically change the position of many who have found themselves in difficulty because of the monthly wait.
I apologise, but I am about to conclude.
Universal credit is the single biggest change to the welfare system. Those who care about it know that it is capable of dramatically changing lives for the better. My party should be proud of it. I will therefore not support the motion because it intends to stop the roll-out and damage universal credit for short-term political reasons. We should resist that, ask the Secretary of State to make the changes, but not stall the roll-out because universal credit changes lives and delivers an improved quality of life to thousands of people.
On a point of order, Madam Deputy Speaker. I hear that political journalists are tweeting that the Government do not plan to take part in the vote later. That would be a show of contempt for the Chamber and our constituents throughout the country. Is there nothing you can do to prevent the Government from opting out of the Chamber’s democratic procedures?
The tweets of political journalists are certainly not a matter for the Chair. I class that as rumour, which is not a matter for the Chair. What the Government decide to do is a matter for them, but we have several hours of debate ahead. That is the important point for the Chamber to note.
Order. Before I call the next speaker, it is obvious to the House that a great many people—about 85—wish to speak. I will therefore have to put a formal time limit of four minutes on speeches. I want to give that warning now so that hon. Members can trim their orations accordingly. Everybody may sit down now. I will not impose a formal time limit on the Chairman of the Select Committee on Work and Pensions, whom I trust to take a reasonable and correct amount of time.
I simply want to ask the Secretary of State a question. He said in his contribution that the scheme was working well—indeed, working so well that he was accelerating the pace of the roll-out. I reported to him in the Select Committee meeting this morning that Birkenhead food bank, after talking to other food banks in areas that have experienced the roll-out, believes that it will need 15 more tonnes of food this Christmas. What message should I take home, please? Should I tell the good citizens of Birkenhead that the food bank is scaremongering, that we should pay it no attention, and that we should take the Secretary of State’s word that the system is rolling out well, or that they should contribute the extra 15 tonnes to the food bank to prevent people in Birkenhead from being hungry over Christmas as a result of the roll-out and the right hon. Gentleman’s inability to deliver a scheme that works?
I will follow your strictures, Madam Deputy Speaker, and be relatively brief.
Let me take first the words on the Order Paper, which do not bear any relation to what the shadow Secretary of State said. She said she was asking the House to support a motion to pause and fix universal credit, but that is not what it says. It is what the title said yesterday, but between yesterday and today all the Opposition are now calling for is for us to pause universal credit and not bother doing any fixing at all.
Perhaps my right hon. Friend needs to look at the Annunciator. We have moved on. We are now not pausing; we are just discussing. There is no mention of “pause”.
I was grateful for my hon. Friend’s earlier intervention, which was taken up. It is a serious point. The former Secretary of State, my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), made the point that pausing the roll-out of universal credit does not help anybody, given the positive effects it is having on getting people into work and allowing them to progress in the workplace. My right hon. Friend the Secretary of State made the point that this is both an in-work and out-of-work benefit. That means that those who are out of work and are thinking about taking a job can have the confidence to do so, because it will not mean throwing up in the air all their existing arrangements for paying for their house and supporting their family. They will have the confidence to take on that work and to take extra hours, because they know they will be better off and that if it does not work out they will not have to go back to the drawing board.
One of the principal concerns about universal credit is what is happening to people’s housing costs. Is the right hon. Gentleman aware that two-thirds of all private landlords now report that the people on universal credit they are renting to are in arrears? Will he support the call of housing charities for changes to be made to the roll-out of universal credit to make sure that when people take that step into work they do not put themselves at increased risk of losing their home? As currently envisaged, that is exactly what the roll-out will do.
Let me address part of that point now and I will also come on to it later in my remarks. We should not compare universal credit with some mystical world of perfection; we should compare it with the existing system. Under the existing system, housing benefit is not perfect. There are lots of issues with housing benefit and tax credits in the existing benefit system. I understand that the citizens advice bureau has about 600,000 ongoing cases under the existing benefit system, so we are not talking about comparing universal credit with perfection. The existing system is not very good, does not work very well, and does not support people very well. Universal credit is an improvement.
On housing and the direct payment of landlords, which I know is controversial, my own view is that it is better to assume that people can manage their rent themselves. In cases where they cannot, and it is shown that they cannot, my right hon. Friend the Member for Chingford and Woodford Green made it clear—as the Secretary of State did, with the roll-out of the housing portal—that we can deal with that. I do not think it is reasonable to assume that everybody on universal credit is incapable of managing their own money. That is what is assumed with the insistence on paying landlords directly. The other advantage of paying the person directly is that landlords cannot then discriminate against people who get housing benefit. If universal credit is paid directly to you and you make the payment, the landlord does not know that you are a benefit recipient and therefore cannot discriminate against you by having signs in the window saying, “I won’t take people on DSS,” which I know some landlords do.
Will the right hon. Gentleman give way?
I do not have very much time and I am conscious that Madam Deputy Speaker wants me to be brief, so let me move on to my final two points.
On the design of the system, my right hon. Friend the Secretary of State is exactly right. It is about setting up a system that is like work, so that those people who are not yet in work have a system that enables them to get into work and manage those challenges. There was talk by the shadow Secretary of State about assuming IT skills. Universal credit is digital by default—it is only by default; people can still apply on paper—and I think 99% of people make claims electronically. In the modern world, most jobs have to be applied for electronically and most jobs require a certain level of IT skill. If someone is not capable of applying online, they will find it very difficult to get into work. It is important that the work coach can identify that requirement, so the proper help and support can be put in place to enable that person to have the digital skills to be able to get into the workplace.
The final point I wanted to address, which I think is potentially life-changing, is the nature of job opportunities open to people. We all know that the existing benefit system has hour limits, so people are unable to take jobs with more hours. There is a 16-hour limit and a 24-hour limit. Employers end up designing jobs around the benefit system, not the requirements of their business or the requirements of the individuals. Universal credit means that an employer can design a job around the requirements of the business. It means that if somebody is successfully working 16 hours and wants to take on more hours to support their family, they do not have to think about the benefit system. They can think about their own arrangements and the needs of their family. They know that universal credit will adjust to mean that they are better off having taken that job and that they will be better off taking those extra hours.
Universal credit is a very powerful benefit and a real change. It will, as has been said, change the culture and the life-chances of many people. I therefore support the continuation of the roll-out of universal credit with a careful test, learn and rectify approach, particularly with a Secretary of State who has demonstrated that he listens. I am not persuaded to support the motion on the Order Paper. I find it very easy to resist that temptation.
I am pleased to be called to speak in this very important debate.
I want to start with the quotes from the Joseph Rowntree Foundation mentioned by the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith). He was very selective, as the foundation was much more cautious about the roll-out of universal credit. Without reform and redesign, universal credit will hurt the very people it is supposed to help: working people, families and communities right across this country.
I am proud that, as a Labour Member of Parliament, I stood in this year’s general election on a manifesto pledge to reform universal credit and end the injustice of claimants having to wait six weeks for their payments. During those six weeks, life does not stop. Rents still need paying, food still needs to be put on the table and the heating bills still need to be paid. I am interested in making sure that working people up and down the country can enjoy dignity, fairness and stability in their lives. Without reform, universal credit promises quite the opposite: it creates instability, uncertainty and injustice.
Working people cannot survive another blow to their finances. Seven years of this Conservative Government has left working people struggling to make ends meet, and universal credit risks pushing many over the edge. This headlong rush to roll out universal credit will have dreadful consequences for this country’s children and young people. They will suffer the most. That is what the Government must remember: standing behind their ministerial statements and spreadsheets are real people, real families and millions of vulnerable children.
As the House knows, the scale of child poverty in this country, which is one of the richest in the world, is appalling. One in four children grow up in poverty today: that is 28%, or nine children in every classroom of 30. In my own constituency, over 9,000 children live in poverty—a shocking 34% of all our children. The Child Poverty Action Group has stood against the rising tide of child poverty. Its analysis reveals how working families will suffer: all families with children will be worse off by an average of £960 a year by 2020, and all single-parent families will be left worse off by, on average, £2,380. The Government should be ashamed of these figures. They have created a system that punishes the very people our welfare system was designed to protect. If the Minister is not yet convinced that a change is necessary, I ask that he reflect on the words of a former Prime Minister who described universal credit as
“operationally messy, socially unfair and unforgiving”.
As he will know, those are the words of former Prime Minister John Major. I ask that the Minister listen and pause the roll-out for the sake of working families and children of this great nation.
In highlighting the fact that these are real people, the hon. Member for Bradford South (Judith Cummins) insinuates that Government Members have no understanding, which is absolute nonsense. I went to a school at the bottom of the league table, my father died at an early age, we had bailiffs at the door, and there was no support. We absolutely understand the importance of providing opportunity. That is what drove me into politics and why I support universal credit. I do not want it paused because it offers people a transformational opportunity.
I am not just plucking stats out of the air. I have hosted roundtables, I have visited jobcentres, I have talked to vulnerable people having to navigate incredibly complex, unique and individual challenges, and for the first time, with predominantly cross-party support, we have now introduced a system designed to treat people as individuals and give them tailored support.
I thank the former Minister for giving way. He emphasised that he did not want the roll-out paused, and I understand his perspective, and that of other Conservative Members, on that point, but he did not mention any potential fixes. Does he appreciate the concerns raised and the fact that in some areas universal credit could be improved?
I have only just started! And I do not have long.
For me, the key is the simplification of benefits. One had to be a nuclear physicist to navigate the old system. We all saw in our casework some of the most vulnerable people missing out on benefits to which they were entitled. That was the driving priority for introducing universal credit, which removes the cliff edge for those wanting to enter or progress at work and those desperate to build up their hours, particularly those with disabilities and fluctuating health conditions, but unable to break through the 16-hour barrier. That has now been removed.
One of the most important benefits of universal credit is that for the first time people have a named work coach—an individual who will provide them with their own unique and tailored support, whether that be extra training, childcare, housing or, for the first time, in-work support. When I talk to staff in jobcentres, I see how incredibly enthused they are. We have empowered them to identify and bring together the help and support people need. That has been combined with a refresh of our jobcentres. For the first time, there is an attitude of wanting to help, a “can do” attitude—an attitude not of trying to find reasons why people cannot do things, but of doing everything we can to give them that opportunity.
I was asked in the intervention what the fixes were. The obvious one—the one we all wanted to see—was changes to the telephone number, so the announcement today was welcome. I also want to see greater engagement with employers, however, to bring them into jobcentres. My right hon. Friend the Member for Broxtowe (Anna Soubry) mentioned that we were close to full employment, and many of those still looking for work, being very far from the jobs market, need additional help. When I was Minister for disabled people, I talked to many people who were desperate for an opportunity and had skills, but the employers were not coming forward to hook up with that. We, as a society, through our refreshed jobcentre network, need to reach out to employers and say to them, “Where are your skills gaps? How can we help you change and adapt to take advantage of the huge wealth of talent?” With the right support, those people can contribute and make a positive difference both to employers and themselves. That has to be a priority.
We must also recognise the need for local solutions around the training options provided. We all represent diverse constituencies and have different employers. If a town is predominantly retail or manufacturing, that should be reflected in the 12-week programmes. Jobcentres must work with employers to set the type of training available in a way that maximises opportunities.
We have to grasp this opportunity to support people in work. This has never happened before. Most of us were pushed by our families to succeed. If we did well on our first entry into work, we were told to push for a promotion. For many of those entering work, however, particularly those on the national living wage who do not necessarily have that extra support, we should be providing mentoring and support. If they are turning up for work regularly, they should be talking to their employer and asking for a promotion, to be made a supervisor, or whatever it might be. We all want full employment and career progression. This is a huge opportunity and we all have a duty to get behind it. Yes, we are right to challenge the detail, but universal credit is transforming people’s lives and I fully support it.
The roll-out of universal credit affects more than 5,000 of my constituents, as Southwark has been one of the trial authorities for “full service area” and has suffered all the consequences as a result. It is fair to say that it has been a disaster for some of those involved: the individuals left waiting 12 weeks-plus in many cases; the 1,242 Southwark Council tenants facing eviction-level arears owing to universal credit delays. Only 11% of council tenants are on universal credit, but it accounts for 40% of all arrears—over £5 million. To cite the comparator that the Secretary of State seemed to struggle with: the average account balance for people on housing benefit is £8 in credit; the average universal credit claimant is now £1,178 in arrears.
It is equally damaging for some other landlords. Leathermarket JMB is absolutely brilliant and has done a huge amount of work to support people through the process, despite being denied information and access to the landlord portal at the beginning. Its average tenant not on universal credit is £73 in credit, whereas those on universal credit have arrears of £648 on average. Jobcentre Plus staff know that the system cannot cope and that the IT system is too fragile and inflexible and does not reflect things such as childcare costs or fluctuating incomes.
As for the voluntary sector, according to the food banks and Citizens Advice Southwark, the number of people coming through their doors has gone through the roof. Among the last tranche of people to whom universal credit was extended—[Interruption.] The Minister is disagreeing. We have had this discussion elsewhere. I will send him a letter about it rather than get into it now. Following the extension of universal credit to parents, the number of children using Southwark Pecan food bank tripled. That is not uplifting—the word credited to the hon. Member for North East Somerset (Mr Rees-Mogg)—but shameful.
We have heard from Government Members about the advantages of bringing all the benefits together into a single system, and there are indeed benefits of simplification, but is not the downside exactly as my hon. Friend says—that when something goes wrong in one part of the system, it brings about a potential catastrophe right across the system, including the potential loss of people’s homes?
My hon. Friend is absolutely right.
The Government stressed again today that they put a lot of faith in advance payments, but those cannot cover full rent costs. We found out this morning that the new guidance for Jobcentre Plus was only sent out this week, demonstrating perhaps that the Government were more afraid of their Back Benchers in today’s debate than they were concerned to address the underlying problems. We have just had a spat about the landlord portal. It is still not fixed. The Government claim it is, and there is some faster information sharing, but there is no evidence of an impact on cutting delays, inaccurate payments or overall arrears levels. The Government acknowledge that 20% of social landlords will never be included in the landlord portal—and that is before we look at the private rented sector.
There are other solutions that have been put to the Government not just recently but for months and years. We need to end the insistence that only the claimant can confirm rents. There is no point having “trusted partner” status for landlords and then ignoring them when they say that rent is owed. We need to remove the seven-day wait period for housing costs and introduce a transitional period of rent payment for those coming from housing benefit—rents do not change just because DWP decides to force someone on to a different programme. We should also backdate housing costs. All these issues have been on the table, but the Government have ignored them.
The Government also need to improve real-time information collection. We know that DWP and Her Majesty’s Revenue and Customs have now set up a “late, missing and incorrect” joint initiative, thanks to information shared by my right hon. Friend the Member for East Ham (Stephen Timms), but the Department acknowledges that that does not address the system defects. The Government are treating the symptoms not the cause of the problems. Today is an opportunity to pause and address those underlying problems, not to push out universal credit even further, thereby increasing debt, poverty, arrears, evictions, food bank use and homelessness.
In my constituency the full roll-out of universal credit began in Lowestoft in May 2016, and is due to begin in Beccles later this month. In Lowestoft significant problems have been encountered: many vulnerable people have been placed in very difficult situations, and at times the system has struggled to cope. Over the past nine months the position has improved, but challenges remain, and it is important for lessons to continue to be learnt as the roll-out accelerates in the coming months.
On 21 February, the Minister for Employment, who is present, visited Lowestoft. He sat down with local DWP and jobcentre staff, the council leader and council officers, and listened to their concerns. Since then there have been steady improvements. The various agencies involved in the delivery of universal credit are generally working well together. Good initiatives have been introduced: there is a vulnerable people officer front of house, the citizens advice bureau works from the jobcentre, and the district council is holding regular workshops with private sector landlords. There is evidence that universal credit is allowing the jobcentre to support those in low-paid work, which it could not previously do. It is therefore able to improve their life prospects, and get them into work. I also think it appropriate to highlight the Secretary of State’s decision to refresh the guidance for DWP staff to ensure that anyone who needs advance payments is offered them upfront, and to make the helpline free of charge.
While it is right to acknowledge the improvements that have been made in recent months, it is important to recognise that much work still needs to be done. First, the long delays before some claimants receive a payment must stop. The Government must seriously consider implementing the recommendation from Citizens Advice that those who need it must receive a payment within two weeks, which they will not have to pay back.
Secondly, the role of private sector landlords in providing housing for claimants must be recognised, and they must be put on a level playing field with social landlords when it comes to setting up alternative payment arrangements. The “give tenants a choice” initiative, launched by the Residential Landlords Association and Shelter, should be looked at closely. If something is not done, the housing crisis will be made even worse as private landlords refuse to accept universal credit claimants as tenants. That will put more pressure on social housing, and will almost certainly lead to an increase in homelessness.
Finally, it is important to have in mind the vital role played by local housing authorities working in partnership with the DWP in the implementation of universal credit. They are having to bear the costs of providing emergency temporary accommodation and recovering housing benefit debt. Either those costs should be transferred to the DWP, or the councils should be given additional funds.
I understand why the Government wish to proceed with the roll-out of universal credit, and I give them my support. However, they must proceed with caution. They must not stick rigidly to a preconceived timetable; they must slow down or speed up as circumstances dictate. They should be pragmatic and not dogmatic, and they should continue to listen and respond to feedback.
I am keenly aware that the full service roll-out is due to start in the Newport part of my constituency on 15 November. As has been made clear by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), and also by a host of organisations including Citizens Advice, Community Housing Cymru—which represents housing associations in Wales—the Trussell Trust, the Child Poverty Action Group, and the staff of those organisations on the front line, universal credit is not working for far too many people.
Although we support the principle of simplifying benefits, the evidence so far suggests that the design problems in the system, compounded by operational problems, delays and errors, mean that too many people are experiencing real financial hardship. In Newport—and in Caldicot, which will have full service in March—the DWP is dealing with only the simplest of claims from single people without children and without complex needs.
The ramped-up roll-out will widen to include more claims, as yet untested in the system locally. We have already seen cases of people waiting up to eight weeks for payments, not being able to meet financial commitments, borrowing and incurring interest charges, and struggling to catch up while remaining in debt. In my constituency, a family with three young children moved on to universal credit because of a new relationship, but then had to be moved back on to legacy benefits and tax credit because the system was not yet geared up for such cases. That family were left for eight weeks without a single payment, and had to rely on food banks for help.
The Government may decide to stick their head in the sand and ignore these valid criticisms, but let me explain what that might mean in my constituency. As I said earlier, the roll-out in Newport is due to start on 15 November. Given the six-week waiting period, my constituents will be lucky to receive their payment on the day after Boxing Day if it is on time, and not until the new year if it is not. No payments before Christmas will mean real hardship, and any payment received will be used to survive and to pay for food and heating, which by then—after six weeks with no income—will be a greater priority than paying rent. In neighbouring Torfaen, with the full service roll-out, 27% of Bron Afon tenants who moved on to universal credit in July had to wait an average of nine and half weeks for payment, which led to debt and borrowing from high-interest lenders.
I know that the Government will talk about advances, but they are not an adequate response. They cover only part of the universal credit claim, and must be repaid through deductions. The point is that people are being put into debt immediately. If half the number of new claimants have to rely on advance payments, the system is clearly wrong, and, as was pointed out earlier by the hon. Member for Airdrie and Shotts (Neil Gray), that constitutes an admission that the system is failing.
Does my hon. Friend agree that the problem is compounded by the level of deductions of third-party debt that are allowed under universal credit—for example, council tax or utility bill debt? It is higher than the level allowed under legacy systems, which means that people are left with much less money.
I absolutely agree. The point is well made.
I know that housing associations are doing all they can to help tenants, and that there are heavy demands on their advice services, not least when they are helping those who cannot go online. However, as Gingerbread has pointed out, two thirds of single parents are renting privately. What is happening to those with private landlords? Are they able to negotiate longer repayment plans?
I, too support calls from organisations such as Community Housing Cymru which want a pause in the accelerated roll-out of the full service until the problems caused by delays have been addressed, improvements have been made in relation to, for instance, the six-week waiting period and the seven days without pay, and—this was mentioned by my hon. Friend the Member for Bermondsey and Old Southwark (Neil Coyle)—the issue of landlord portals has been sorted out.
Let me finally say a word about our local DWP staff, who are dedicated and extremely hard-working, although I cannot say that I have spoken to many who feel enthused. They are on the front line of the delivery of the roll-out. Their numbers have been cut, and all kinds of changes are taking place in their service. They need to be properly resourced and supported, and the Government must make that a priority.
The movement on the call charges is welcome but overdue. We now need the Government to move further. We need them to understand the very real impact on people, not least in the run-up to Christmas. They must consider the practicalities, and pause the roll-out.
It is right that we are debating this important issue and, given its importance to all of our constituents, it is right that we do so respectfully, recognising, even where we disagree, the evident strength and sincerity of the views of hon. Members on both sides of the House.
The shadow Secretary of State, the hon. Member for Oldham East and Saddleworth (Debbie Abrahams)—with whom I do not always agree in this Chamber, but with whom I frequently agree as my fellow co-chair of the all-party group on dementia—made an important point in her speech, highlighting the need to fix our social security system to ensure it functions effectively. Our challenge is not that our historical social security system is badly designed, but that in many ways it was never designed as a whole at all. It has evolved from myriad changes over the decades, and for too long Governments of all shades shied away from this challenge. Universal credit represents a real step forward in addressing this, and in seeking to design a system fit for the 21st century, and it is the right thing to do.
Universal credit represents a progressive change to simplify the system, to tailor it to individuals, and to help to ensure work pays, removing that dreadful 16-hour cliff edge that previously existed.
In the context of the cliff edge, does my hon. Friend agree that under the old system some claimants lost £9 from every extra £10 that they claimed, and that that is what we are trying to correct?
My hon. Friend makes the point succinctly and effectively, highlighting, too, the great deficiencies of the previous system. The simple truth is that universal credit is helping to get more people into work, which we can all welcome.
On the call for a pause, the shadow Secretary of State did not set out in detail what she wants to see changed through such a pause. What I did, however, hear this morning in the Select Committee was a Secretary of State who is listening, and who cogently set out how the staged roll-out is specifically designed to allow for lessons to be learned and subsequent roll-out to be refined and adapted where improvements can be made, but without the damage that will be done by pausing the roll-out.
On the roll-out being staged, does my hon. Friend agree that a situation in which currently 8% of claimants are on UC, and the proportion will rise to only 10% by January, hardly amounts to a precipitate roll-out?
My hon. Friend makes a valid point, which highlights the point that both the Secretary of State and I have made, which is that this is being done in a very measured way.
I join other colleagues in welcoming the Secretary of State’s announcement in respect of the telephone advice line and the increased highlighting of the advance payments that are available. It is right that this help is in place, and I hope that my right hon. Friend will continue to take a close interest in how well this is working, making changes where necessary, and ensuring that all those claiming are treated with respect and supported. As my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) set out, universal credit is about treating people with respect and supporting them.
In seeking to ensure that we learn from the roll-out of universal credit and make changes where we can, as the roll-out is designed to allow, we must never lose sight of, or put at risk, the significant improvement of universal credit on previous systems and the significant benefits it delivers in helping people into work and changing their lives.
The Government’s aim was to simplify and streamline the benefits system, to improve work incentives, to tackle poverty among low-income families, and to reduce the scope for error. The Government were, however, warned by IT companies that it was not possible to build a universal credit system, bringing the six systems together, in time for implementation, but they ignored that and continued; they developed in haste. The Government also ignored the former Secretary of State, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), when he called on the Prime Minister to reverse cuts in universal credit; it is still necessary to reverse all the cuts made to the initial system.
Former Prime Minister John Major described universal credit as “operationally messy, socially unfair” and socially unforgivable, but the Government did not listen to him. Experience tells us that the online system is far too complex, and was it ever really necessary for the helpline to cost 55p a minute? The announcement today is about appeasing Back Benchers; however, it will help new claimants.
The aim was to improve work incentives, and tackle poverty and low pay, yet the experience is of cuts to taper allowances, with 63% of every pound taken off people. Some families are £2,100 worse off than under the previous system.
I cannot see how this can be an incentive for people to go into work when most of the jobs they get are on zero-hours contracts. On the other hand, people are driven to food banks, which were brought in by the Churches to deal with the refugee problem, not to deal with the problems of this country.
I agree entirely with my hon. Friend.
These people are stressed, suffering from the effects of poverty and the indignity of debt and borrowing from family and friends. Many are on medication for mental health issues, and much of this is debt related. My constituency of St Helens South and Whiston suffers from income poverty. Many of the jobs created in the last 10 years pay much lower wages. Some people are holding two or three jobs down and many are on zero-hours contracts. My constituency also has one of the highest prescription rates of antidepressants in the country, and many of those on that medication are young people and parents.
The assessment period for universal credit is based on four weeks working. My families do not have savings to live on for four weeks when they have been out of work, and their extended family does not, so they go into debt.
The Government have insisted on the poor paying the price of banker-induced debt, and they have used the global financial crisis to cut public services and stop the improvements that Labour introduced—policies that were responsible for lifting 1 million children out of poverty. Since 2010, the number of children in poverty has been rising. The Child Poverty Action Group has published figures showing that a further 1 million children may be driven into poverty, including 300,000 under the age of five—children hungry, children cold, children not able to go to school because they have not got a change of clothes. The Government are responsible for breaking up many families and children are suffering from stress. No wonder we have increasing numbers of children suffering from mental ill health.
The food bank in my full-service area has a 17% increase in usage—more than double the national average. More than half the users are people in work, and many of them are national health service workers.
Will the hon. Lady give way?
Not at the moment.
A Citizens Advice survey showed that more than 39% of respondents waited more than six weeks for payment, while 11% waited more than 10 weeks and some waited 11 weeks. Where do they get the money from to live and to buy food? Of those on universal credit, 79% are in debt, which puts them at serious risk of eviction. Private landlords are not as understanding as social and charitable landlords. Bailiffs bang on the door, gas and electricity get cut off, and people are even at risk of imprisonment. Of those in rent arrears, 42% went into debt after making their claim for universal credit. Due to long waiting times, many have had notice to quit and been evicted from their family home.
The Government need to stop and open their eyes and ears. They should help, not punish, the poor and disabled. Be fair. Pause and repair this system.
I believe our welfare system should do three simple things. It must be compassionate to those who need our help, it must be effective in getting them the help they need, and it needs to be fair to those who pay for it. Simply put, universal credit is a rare example of a policy that delivers on all three counts.
To start with compassion, rather than recipients having to make calls to up to three different agencies when something in their life changes, universal credit simplifies the system and ensures that nobody misses out on a benefit that they are entitled to because of a bureaucracy that is simply too complicated to navigate.
Is the hon. Gentleman aware that people trying to claim universal credit have reported being on the phone for an hour trying to get their case dealt with? At 55p a minute, that cost is astronomical.
I am sure that the hon. Lady was here and heard the Secretary of State make the point that the calls that have been made were all to local rate numbers. It is not right to say that they were premium rate numbers. As of today, those calls have been made free for all claimants, although they were offered the opportunity to be called back for free if the call charge was difficult. I am aware that the average wait time is two minutes, and of course a wait time of an hour is unacceptable. I am sure Ministers have heard that and will be doing everything they can to ensure that everyone across the country benefits from a prompt and cheap response.
At the same time as simplifying the system, universal credit humanises our bureaucracy by recognising that those who need our help do not have exactly the same needs. Instead of a faceless homogeneity, for the first time personalised work coaches can compassionately take into account the specific needs of each individual and their specific circumstances, tailoring the approach to them and ensuring that they get the specific help that they need.
How simplified, fair and supportive does the hon. Gentleman think it is for the 116,000 working disabled parents who are set to lose £40 a week from the disability income guarantee?
I cannot say that I recognise that figure, because £700 million more was made available in the last set of universal credit reforms, all of which was directed at the most vulnerable in our society.
Will the hon. Gentleman give way again?
No, I will carry on, given the number of people who want to speak.
Compassion alone is not enough. The effectiveness of our welfare system should be properly judged by the number of lives that it transforms, and that transformation comes from well-paid work. Universal credit ends the well-documented problem of single parents effectively working for free if they want to work for more than 16 hours. Universal credit ensures that all work truly pays, and it is working. Compared with the system that it replaces, claimants spend twice as much time actively looking for work and, for every 100 claimants who found employment under the old system, 113 will find employment under universal credit. In reality, the lives of more than 250,000 people will be transformed over the course of the roll-out through having a decent job and the opportunity to build a stake in our society.
Finally, universal credit is fair to the people who pay for it. In Britain today, we spend around twice as much on working-age welfare as we do on education. To put it another way, for every £1 that the taxpayer sends to the NHS, they also send £1 to the working-age welfare bill. Given the sums involved, I make no apology for speaking up for those who ask me, “Is this money well spent?”
The hon. Gentleman talks of the transformational impact of universal credit, so will he please comment on the transformation for my constituents? In Croydon, two thirds of families in local authority housing are now in rent arrears and face eviction, compared with less than a third before universal credit was introduced.
I obviously cannot comment specifically on what is going on in Croydon, but the reasons for rent arrears are complicated. The evidence shows that the level of rent arrears after three months of universal credit is exactly the same, if not lower, than under the old system.
Returning to the sums involved, universal credit ensures a responsible and sustainable system by putting in place a sensible regime of conditionality. That gives hard-working taxpayers the confidence that when they contribute to the system, not only will that help somebody to get back on their feet, but that the person will also have a responsibility to do their bit. That is fair.
Universal credit is not perfect—no system so large and complex can be—and we should make improvements where we can, but it is significantly better than what it replaces, and the fundamentals of what it is trying to achieve are sound. It has been implemented slowly and methodically. It is insane to argue that it has been rushed when the full roll-out will have taken almost a decade from start to finish. This is welfare reform in action: making things simpler, ensuring work pays, and transforming lives. I urge the Government to carry on with their plan.
I am going to make a straightforward speech as I am aware of how many Members want to speak. I am conscious that many of our debates involve jargon that is inaccessible to most people who try to follow politics, so I rise to make just three basic points. First, I will explain what universal credit actually is. Secondly, I will describe what has gone wrong since the universal credit roll-out began. Thirdly, I will explain why it is so important that the Government halt—not scrap—the roll-out until we can deal with the problems effectively.
I find myself in a bizarre situation: I am going to stick up for the principles behind a Tory policy. Universal credit is a simplified online-only way of receiving benefits. It rolls together six benefits, including unemployment benefit, tax credits and housing benefit, into one personally tailored payment. It makes sense. For a lot of people, social security used to stop altogether once they began to earn above a certain amount. Universal credit seeks to remedy that by slowly and steadily declining as people earn more through their job, rather than suddenly stopping altogether.
That all seems absolutely reasonable, which is why I stress again that we are not calling for universal credit to be scrapped altogether. We want it to be halted because, like most Conservative policies, the minute we scratch beneath the surface we see the harsh truth. What has gone wrong here? There is a minimum 42-day wait for the first payment, which we have heard umpteen folk talk about, but I do not think the Chamber appreciates the reality of what that means. It means the most vulnerable are being left for six weeks with absolutely nothing.
My South Lanarkshire constituency was one of the first in Scotland to see the roll-out of universal credit, and I have witnessed my constituents relying on food banks as they wait up to 12 weeks for their universal credit payment. Does my hon. Friend agree that the policy is clearly not working in practice? Will she invite the Minister to visit my constituency and see how his policy is actually working, because it is a disaster?
I thank my hon. Friend for raising that point because I want to say to Conservative Members that none of us is lying about our experiences. We are not making things up. We are coming to the House with genuine problems that the Government are failing to address.
DWP figures show that around one in four new claimants waits longer than six weeks to be paid—a 25% failure rate: staggeringly alarming given that universal credit is still in its early days. Benefit delays remain a primary reason for the increase in the use of food banks. Citizens Advice has found that, from 52,000 cases, those on universal credit appear to have, on average, less than £4 a month left to pay all their creditors after they have paid essential living costs.
Will my hon. Friend give way?
I will keep going.
To progress with the roll-out of universal credit as it stands is callous at worst and arrogantly idiotic at best. We have heard multiple times that people can now apply for an advance payment, but the fact is that those advance payments are nothing more than a loan that has to be paid back at a later date. Simply changing the terms of that loan does nothing about the litany of systemic failures throughout the entire process. All it is doing is creating more of a burden on claimants and forcing people to deal with a problem that is not their fault in the first place.
The Government are almost starting to behave like some kind of pious loan shark, except instead of coming through people’s front door, they are coming after their mental health, their physical wellbeing, their stability and their sense of security. That is the experience of all our constituents.
This debate got me thinking about how all this has coincided with seven years of cuts and failures. The Government have failed to rebalance our economy, and they have failed to reach their own fiscal targets. We are not dealing with the national debt; we are simply shifting it on to vulnerable households. We have the worst decade of wage growth in 210 years. To put it in context, that is the length of time since the Napoleonic wars—that is how bad it is just now.
Scratch beneath the surface and we see that things are not as they appear. All we get is clichés about being strong and stable—scratch beneath it, and it is nothing like the truth. We are told that all these cuts are fine because we are introducing a national living wage—scratch beneath the surface, and it is a total lie because the national living wage is 95p below the real living wage.
I have sat in the Chamber and heard over and over again from Tory MPs that the social security reforms have been put in place to incentivise work. That is fair enough, but the Government cannot even incentivise their own Scottish Tory MPs to turn up and miss a football game in Barcelona—don’t dare talk about incentivising. I have heard the Government use that argument time and time again to justify their choosing to keep slashing money for the poor. The argument is used to justify the two-child policy and their sickening rape clause. [Interruption.] Conservative Members should listen for a wee second. I have heard it used to justify the sanctions regime while I have stood in this very Chamber and implored the Government to make it more humane—[Interruption.]
Order. The hon. Lady will be heard.
Thank you, Madam Deputy Speaker. As I have a wee bit of silence, let me take this opportunity to say as loudly and as clearly as possible to everybody in here: plunging people into debt does not incentivise work; forcing people into hunger does not incentivise work; causing anxiety and distress, and even evicting some families from their homes, does not incentivise work. Now the good news is that every single person sitting in this Chamber has the power to change this tonight, so listen to us—like I said, we are not making this up. I tell you something: this Government have absolutely no excuse for pushing ahead with this reform after today—halt it and halt it now.
I am grateful to have a chance to speak in a debate that has had well-informed contributions from Members on both sides of the House. Rather than going over all the arguments we have heard so far, I want to talk about a couple of personal examples I encountered in my previous career in retail, which show why this reform is so important in creating a system where it does pay to work. Retail is an industry where there are inflexible working hours and unpredictable amounts of overtime are often available; it is often dependent on the demand for the products in the store and so on.
Let me give a couple of examples that I saw during my time as a store manager in Lidl in my constituency: almost 10 years. As happens in many discount retailers, we often worked with a skeleton crew in the store—often as few as 12 members of staff. In such a situation, if one or two staff are limited to working 16 hours, it has a big knock-on impact. It does not just affect the individual who struggles to work the overtime, even though they want to; it has knock-on impacts for the business and means salaried employees, who might not be paid any overtime, still have to work late into the night because of the reduced flexibility that the current system offers. That is clearly not what it was designed to do, but it is one unintended detrimental consequence for the business and other employees.
I wish to make one other point about the unintended consequence of the current system for people who want to work more than 16 hours but are prevented from doing so. What they often do in these situations is end up hiding the hours that they work, through moving around holiday pay in the payroll system and even, as happens much more regularly than we might think, through store managers agreeing to pay other employees in the store; the money is received into their bank account and they then pay their friend, who can actually work the overtime but refrains from doing so because of the 16-hour limit. Another point to make on that is that the people who end up willing to be part of those trades are younger and often get paid by the retail business at a lower wage because of that. They therefore end up passing across the lower wage to the person who would work or lose out on money themselves because they transfer across to somebody else from the post-tax income.
One other point about the UC system is that because it offers support to people through the work coach system, it helps a lot of people in industries such as retail who are under-confident about the progress they can make in that role. When I started as a shelf stacker in Lidl at 18, I was lucky enough to have parents who pushed me to keep progressing through the ranks. A lot of people who are under-confident and do not have that support do not get that sort of help and encouragement to step up through the business. Often we get people who are reliable employees—
I am struggling to follow the point, because one of the biggest challenges of UC is that those with fluctuating incomes struggle to get a consistent payment in order to pay their arrears. Although the hon. Gentleman may have been successful in retail, he is going to struggle to sell this particular turkey to employees in my constituency.
As I say, my experience for many years has been of a hugely detrimental experience for people who try to work over the 16 hours if they are pushed to do so. So I do not accept the point, because I think the work coaches genuinely help people with their confidence in order to move forward. I have seen real-life experiences of that in Tesco and Aldi in my constituency, where I have spoken to employees who receive that sort of support.
In the short time I have left, I should say that I am encouraged by the Secretary of State’s announcement of the cancellation of the helpline fees. That is surely a simple and right change to make so that people on low incomes who are struggling to find work do not have to pay those charges. I am pleased by the Secretary of State’s assurance that we will not move faster than we should, in order to be sure that the system can take into account any difficulties in moving forward. I look forward to supporting a system that is helping people to move into work faster and to stay in work for longer. Universal credit is helping more people to move into work.
I am pleased to be able to speak in this debate on a matter of some concern to me, because today universal credit is being rolled out in the Easington constituency; mine is one of 45 areas throughout the country in which universal credit is being rolled out this month. Like the hon. Member for Paisley and Renfrewshire South (Mhairi Black), I just cannot stand by and listen to some of the comments from Government Members, who speak as if this is an incidental, unimportant and dispassionate matter.
Some Conservative Members imply that there is no hardship or deprivation; they should walk a week in my shoes and come to Horden, to Easington and to the food banks. [Interruption.] Have Conservative Members seen “I, Daniel Blake”? If they have never lived it, it is instructive to try to understand what “digital by default” means. I heard a former Minister, the right hon. Member for Forest of Dean (Mr Harper), say what a wonderful thing digital by default is to incentivise people and prepare them for work, because many job applications have to be made online. That is absolutely true of job applications, but the fundamental difference with universal credit is that in order to remain live, the application has to be updated daily using a smartphone or a PC. Many of my constituents do not have access to PCs and smartphones. Many of them come to my office begging for food vouchers, and I am allowed to give only three. It is heartbreaking. They have to choose between heating and eating.
How are they supposed to access computers? We have two large centres in the constituency with libraries. Those on the Government Benches are MPs—probably millionaires with comfortable lifestyles—but they do not understand the everyday trials and tribulations of ordinary working people. That is the problem.
I represent a deprived coastal constituency. I must say, both personally and on behalf of many of my colleagues on the Government Benches, that the idea that we do not listen to our constituents or see the experiences that the hon. Gentleman sees, and the idea that he has a monopoly on compassion, is profoundly offensive.
The problem is Government Members’ lack of understanding. The Opposition are calmly and rationally putting forward a solution to pause and fix the problem with the roll-out.
Does the hon. Gentleman remember the former Secretary of State, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), saying that he could afford to live on benefits of however much per week? Does the hon. Gentleman reckon that anyone on the Government Benches would be able to live on thin air for the next six to 12 weeks while universal credit is rolled out?
I do recall those remarks, and I do not think it is possible. It would be incredibly instructive if Government Members actually lived on benefits and experienced what it is like.
Does the hon. Gentleman share my concern, which I am sure is the concern of many Members present who are due to face roll-out in November, or towards the end of November, that we might end up with constituents with no money for food or heating over Christmas and winter?
That is precisely the point that I am trying to make. I am afraid that the heat of the moment has tempted me away from the three things that I wanted to say.
As currently constituted, this system will penalise the poor and do nothing to resolve the underlying issues of low pay, housing costs and insecure employment. In my constituency, the Walkers crisp factory is closing down a month before Christmas. One Member on the Conservative Benches said that fewer than 300 people were unemployed in her constituency. I have more than 300 unemployed people from one factory closure.
The East Durham Trust, which is a tremendous initiative in my constituency, is making up food parcels because the Trussell Trust cannot keep up with demand. It is currently raising money to cook food, because some poor people do not have access to cooking facilities. I want to encourage all the good people—not just those on the Opposition Benches and in my area, but on the Government Benches—to donate to such organisations. The East Durham Trust is trying to raise the modest sum of £10,000, which will be matched by Comic Relief. I was at its 10th anniversary event, celebrating the achievements of the community and voluntary sector.
This terrific event was addressed by the chief executive of the East Durham Trust, Malcom Fallow. He spoke to me about a young boy who was attending the community barbecue, which was trying to feed some of the most deprived and vulnerable families in the community of Peterlee in my constituency. He said that the young boy put a burger in his pocket. When he was challenged about it, he said that he was taking it home to feed his hungry sister. That is an indictment in 2017. It is shameful and it should shame this House. It shames me that, in this great country of ours in 2017, children are going hungry because of a flawed benefit system. It is a system that can be fixed, and we have an opportunity to do that tonight.
Communities such as mine are being forced to create their own food banks to feed their neighbours because the current benefit system—I might say the personal independence payment system as well—is not working. I commend the work of the East Durham Trust; it is a fantastic organisation. However, if this Government showed some compassion and reviewed the system, such organisations may not be so necessary.
Like the hon. Member for Easington (Grahame Morris), I too have universal credit rolling out in the main town of my constituency. I do not consider that incidental or insignificant, and I am very saddened by some of the comments that have come from those on the Opposition Benches.
I recognise the significance of the roll-out of universal credit, which has gone live today in Bury St Edmunds, with the Stowmarket area in my constituency following in February. To that end, I have been engaging with the DWP, the local authority, housing agencies, charities and others. As the system rolls out, we must ensure that that close working continues. For example, I know that recently there has been a spike in food bank use locally, which is helpful to know. As we go forward, the success of people’s lives is absolutely the responsibility of every one of us in this place.
As for universal credit itself, I welcome the simplification and streamlining of a complicated and frustrating system and the fact that it encourages people back into work. It is welcomed by staff on the frontline and by charities that I have met.
So far, everyone has talked about getting people into work, but there is a group of people who are in work—the self-employed. One problem with universal credit is that because of their housing problems those people often end up needing support in that principal area. There is some evidence that the self-employed are particularly badly affected by universal credit. Would it not be worthwhile to look at that aspect in particular and to delay the roll-out?
I thank the hon. Gentleman for his intervention, but if he will bear with me I will come on to the areas that I have concerns about.
The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) was talking on this topic on the “Today” programme, and, interestingly, did not offer any concrete reasons why the scheme should be paused; nor has she done so during this debate. This is an agile system and we are learning. It was first rolled out in Lowestoft in Suffolk, and my hon. Friend the Member for Waveney (Peter Aldous) indicated the problems. I have spoken to the DWP leads to ensure that we understand those problems and that we are looking at concrete solutions. The system has to be fair to claimants and taxpayers. Indeed, some claimants are taxpayers. It will always offer challenges, and there is always a case to improve and ask how the system can be made better.
I represent an area where the average wage is below the national average. It is important to understand that the people I meet in my surgeries are not well off and we need to take time to understand their individual circumstances. Although the number of people who are unemployed in my constituency is comparatively low figure 645, those are 645 people whom my everyday work aims to get into employment. That is why I also talk to employers in the engagement groups to which I reach out.
Of the individuals out of work, about 20% struggle to manage their finances for a multitude of reasons, so being simplistic about the problem does no one any favours. For instance, it is likely that single parents are a group with specific needs, and I have spoken to somebody in the police force who is worried about people with addictions. Are the work support coaches allowed to advocate for the payments of rents in difficult circumstances? I also draw people’s attention to the fact that they will get help filling in paper forms, particularly if they have problems using a computer. There were enormous problems in 2003 when tax credits were rolled out. Universal credit is being steadily rolled out—we are only approaching 10% roll-out. We need to work with the system, rather than against it.
I would like the Minister to talk about the portal for trusted partners. I spoke to my local housing association yesterday and it is not yet able to get to it. It is important that housing associations do have access in order to ameliorate some of the problems around rent arrears that we have discussed.
I am keen to see partnership working and a timeline for the trusted partners portal. I am also keen to ensure that we support the most vulnerable people, who we know need that support. Where direct rent payments are needed, we must ensure that they are made speedily with advance payments and all the other support we can give. We need real-time data that show improvements, so that we can show we have a supportive welfare system, not a chaotic one. That is what we are about.
There are still approximately 60 Members who wish to speak in this debate, so I shall reduce the time limit to three minutes after the next speaker. Do bear in mind that every intervention means that somebody else is less likely to speak, as it adds time to a speech.
This debate is as vital as it is urgent, on something that has deeply affected my constituency and continues to do so. Since the full roll-out of universal credit across all three jobcentres in Newcastle in March this year, it has possibly doubled the work of my caseworkers and other local agencies. Since its introduction, it has been nothing short of a shambles. To roll it out any further, without dealing with some of its fundamental failures, will just roll out misery for thousands more people. It simply is not working, and in the short time I have I will set out as clearly as possible exactly why.
The deliberate delay in payments built into the system is fundamentally flawed. That does not even include the extra delay due to administrative errors. The Government’s figures show that one in five payments is not made on time. I am talking about the very deliberate six to seven-week wait for the first payment. Who, of those just-about-managing people the Prime Minister claims to want to help, could manage for seven weeks without any income? Who, in work, waits six or seven weeks for their first pay packet? The Government are not being straight with people. They are pushing people into spiralling debt and misery that they will take years to manage their way out of, if they ever do. The advance payments—otherwise known as crisis loans—do nothing to resolve that funda