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Universal Credit: Household Income

Volume 632: debated on Tuesday 28 November 2017

2. What discussions he has had with the Secretary of State for Work and Pensions on the effect of the roll-out of universal credit on levels of household income. (902583)

Universal credit has already been very successful in getting more people into work by ensuring that work always pays, and that has boosted household incomes.

I am not surprised that the Government announced small changes to their discredited universal credit programme in the Budget last week, following months of criticism, unanimous defeat on an Opposition day motion, discontent across the whole House, rising debt arrears and even evictions. But what is surprising is that, rather than halt the botched roll-out and fix the failing system, the Government have chosen to put back only £1 for every £10 cut from the system.

No, thank you.

Will the Minister accept that it is now a matter of urgency that proper action is taken to address the real human suffering imposed on our communities by this roll-out?

I think we should remember the 1.4 million people who spent the previous decade under Labour trapped in poverty because every pound they earned was taken away in benefits. We have introduced universal credit so that every extra hour of work pays, and all the evidence suggests that it is much better than the previous scheme. Employment pays, and people on universal credit are more likely to be in work.

Would my right hon. Friend like to comment on the irresponsible scare stories put out by the BBC—first on Radio 4, then on “BBC Breakfast”, on its website and across all its media platforms—that up to 100,000 people on in-work universal credit would receive no benefits over the Christmas period?

I think it is disgraceful that that fake news was put out on our national broadcaster, when universal credit is actually helping people get into work and earn extra money. It is particularly poor that some of the lowest-income people in our society have been unnecessarily worried when, in fact, under universal credit, everybody can receive an advance on their payment.

Even after the Budget’s limited changes to universal credit, it will still make young single-parent families with school-age children £6,000 a year worse off—those are OBR figures. We should remember that without further action to stop that, the Government will push 1 million additional children into poverty. I would like to know what they will do about that.

I can tell the hon. Lady that poverty and income inequality are, in fact, at a 30-year low, thanks to this Government’s policies. What universal credit does—rather than leaving people on the scrapheap, which is what happened under the Labour Government—is help people get into work. What we have seen is that the fastest growth in employment has been among the lowest-income people in our society.

I welcome the changes in universal credit announced in the Budget speech. Did my right hon. Friend note that, in its Budget analysis, the Institute for Fiscal Studies described the changes in universal credit as

“well targeted at those who find it difficult to cope with the six week wait”?

My hon. Friend is absolutely right. What we have been doing is making changes to universal credit to make sure it works for absolutely everybody. We have rolled it out gradually to make sure it is effective, unlike the previous botched efforts of tax credits under the previous Labour Government. We have learned the lessons. We are helping more people get into employment. We have the lowest unemployment since 1975, and the people who have benefited most are the lowest earners in our society.

Universal credit is being rolled out in Bishop Auckland over Christmas, affecting 10,000 households. On the Government’s figures, we know that it will take £20 million out of the local economy. Surely the Minister can see that that is bad for jobs and bad for local shops.

With respect, I do not think the hon. Lady is taking into account the extra income that those families will earn because they are more likely to be in work under universal credit. That is where the benefit is. Rather than keeping people in a poverty trap, where they were losing £1 for every extra £1 they were earning, work always pays under universal credit, and people are able to earn the money they need to support their families.