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House of Lords Hansard
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16 November 2017
Volume 785

Motion to Take Note

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That this House takes note of the impact of Universal Credit on claimants.

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My Lords, I am sure that we all want—wanted—universal credit to succeed, so in opening this debate I first pay tribute to the noble Lord, Lord Freud, who has heroically sought to build UC. It has been badly battered by HMT, but his architecture is still there. Secondly, I thank our Lords Minister, the noble Baroness, Lady Buscombe, who has been so helpful and approachable. It is a pleasure to work with her.

With so much early good will, why is UC in so much trouble, its effects on so many claimants catastrophic? People newly claiming UC from today on will not get their first payment until after Christmas. How will they cope? The story of UC is now a story of broken promises. During the Second Reading debates of 2011, Mr Duncan Smith and the noble Lord, Lord Freud, in good faith made three core promises to us all.

On 9 March 2011, Mr Duncan Smith said,

“work will always and must always be made to pay”.—[Official Report, Commons, 9/3/11; col. 921.]

The second promise, by the noble Lord, Lord Freud, was made on 13 September 2011, when he claimed that UC would lift,

“600,000 adults and 350,000 children out of poverty”.—[Official Report, 13/9/11; col. 629.]

Thirdly, Mr Duncan Smith said that UC would be,

“a regime that is easy to understand”.—[Official Report, Commons, 9/3/11; col. 923.]

The noble Lord, Lord Freud, said that a single UC benefit would be simple to claim and access.

Three promises: work would always pay; families would be lifted out of poverty; and a single benefit would ensure a simple structure. UC would, we hoped, be transformational. Three core promises, and every one broken. Why? HMT’s cuts and, to some extent, DWP delivery. The DWP fought Treasury cuts and lost. Now that UC is far meaner in its payments, nastier in its sanctions and harsher in its delivery than tax credits, HMT is suddenly anxious to roll it out ever faster—10 times faster, laying waste to DWP promises and our fellow citizens’ lives.

My examples come mainly from the deeply distressing 650 pages or so of last month’s written evidence to the Work and Pensions Select Committee. One claimant wrote that UC can transform lives,

“that is certainly true, by catapulting the ‘only just managing’ into poverty and debt”.

That is in UCR 0019.

Broken promises: let me count the ways. Promise one was that work would always pay. No. The IFS says that 3 million working families will, on average, be £2,500 a year worse off. The work allowance, which is taper free, before UC withdrawal kicks in, has been cut by up to £2,000 for a lone parent, and for single people, scrapped. A lone parent with one child now has to work 25 hours a week on UC to get the same income as working 16 hours a week under tax credits—60% more hours for the same income. Would we?

Second earners, mostly partnered women, are even worse hit, with no work allowance, so 63p in the pound taper from the first pound, tax and NI, childcare and loss of council tax support can take some 93% of her earnings. Why work when, with travel costs, you can be worse off? Would we?

The self-employed are especially exposed, as are disabled families. One client told the charity, Turn2us, “I will be better off giving up work because with the new UC I will be £200 worse off … so contemplating unemployment in 2018”. That first promise that work always pays is not for him, nor in future, when UC reaches 7 million people, for many thousands of others, so the DWP uses the whip of unbelievably harsh sanctions to get people into work that for too many does not pay. The first core promise is therefore broken. The second core promise was that UC would lift 350,000 children out of poverty. Instead, says CPAG, drawing on DWP and IFS stats a fortnight ago, HMT’s repeated cuts to UC will send 1 million more children into poverty by 2021, their lives blighted. How in all decency can we defend this even to ourselves? Promise number two is therefore broken.

I come to the third broken promise on smooth delivery. Where to begin? There are missed payments, delayed payments, wrong payments, cases lost or closed, making late appeals impossible, staff unable to handle contributory benefits, claimants lacking acceptable ID, reputable advisers such as CAB unable to act for clients in hospital because they lack explicit consent, staff asking for the wrong information, documents getting lost, keeping incomplete records and giving conflicting advice. Claimants have informed the DWP that they could not attend an appointment as their employer refused them time off. They were sanctioned. They were in hospital: sanctioned. An appointment posted by the DWP to the wrong address: a three-month sanction.

Take IT. Parts of rural Norfolk lack internet access; in any case struggling claimants, especially older or disabled people, cannot afford dial up or smart phones, nor can they always get to jobcentres, 87 of which, unbelievably, are closing just at the time when we should be boosting jobcentre support. What can they do? A claimant had an appointment for 10 am. He notified the DWP that his first local bus arrived at noon: he was sanctioned. One man—reference: UCR 0065—with a traumatic brain injury affecting his memory, was late for his appointment. He was sanctioned and lost several hundred pounds. He self-harmed, and, unable to afford the bus fare to hospital, he closed his wound himself with super glue.

Tribunal judges are scathing. The greatest problem, however, is the six-week or more waiting period, and then monthly payments in arrears—supposed, if I may say so, to moralise some of the most marginal in society into behaving like middle-class salaried professionals resilient with savings. The Government must know the stats: 58% of those on UC are paid weekly or fortnightly, not monthly. Plymouth Community Homes has 14,000 tenants; 75% of its claimants are paid weekly, fortnightly, or have limited hours, so payment delays sink those claimants deeper into the quagmire of debt. In Gateshead, 221 of 231 tenants on UC have arrears over £800; in Halton, 920 of its 1,000 tenants have these arrears. Croydon, Southwark and Tower Hamlets have an average debt for all UC payments of about £1,000. Many, I fear, will never get out of the debt we have constructed for them. Family members, themselves struggling, are trying to support other family members. As one sister said, it is “the poor that are supporting the poorest”.

More than a quarter of claimants are waiting more than six weeks for their initial payment; one in 10 is waiting for more than 10 weeks—without earnings, benefits, or savings. They are pawning their belongings and missing meals. Charity workers are finding fivers out of their own pockets to put the meter back on for some lighting and heating. All these people are facing Christmas.

Half of new UC claimants now claim advance payments, which is surely evidence that the six-week model was flawed from its very beginning. But, unlike the low cap in tax credits debt recovery, for the next six months DWP takes up to 40%—often far more with other debts—from your UC standard allowance for advance payments, council tax and utilities arrears. Each month, your personal, private debt rises to cover the shortfall from your public debt, as handled by DWP.

The second largest delivery issue is that UC is not paid directly to landlords on request. Some 79% of UC claimants are in rent arrears. Some have already been evicted by social landlords. In Northern Ireland and Scotland, at tenants’ request, UC can be paid fortnightly rather than monthly in arrears and the housing element paid directly to the landlord. If it can be done in Scotland and in Northern Ireland, why not in England?

DWP is extending its trusted partner and landlord portal scheme, but not to the private sector. Private landlords need their rents to finance their mortgages. Some tenants are waiting for 10 or 12 weeks—yet eight weeks of arrears are mandatory grounds for re-possession.

So what changes might, in my view, help to rescue UC? What might begin to redeem those broken promises: that work should always pay; that people would be lifted out of poverty; and that delivery would be simple? Of course, I would like a reinstatement of the cuts, from benefit freeze to second child policy—those are big ticket items. But, in particular, we hope to see a four-week rather than a six-week initial payment period in the Budget.

We want, at tenants’ request, fortnightly payments of UC and direct payments of the housing elements to landlords, as in Scotland and Northern Ireland. We should cap and slow down DWP debt recovery to avoid even deeper debt.

We should raise the work allowance; pilot some second earners to see whether their own work allowance would bring them into work. Two-thirds of children in poverty have a working parent. If work really paid, a second earner could lift her children out of poverty—and that must matter, I am sure, to us all.

Here is a proposal from someone who knows how UC works. Most UC problems hit and hurt claimants within the first three or four months. A fortnight’s UC grant at the beginning of a UC claim—with no clawback, just a fortnight’s grant until first full payment as now—would keep so many families afloat.

This would be a grant that does not need be repaid. But how much would it be? By 2021, it is calculated, total social security cuts and welfare reforms will be “saving” HMT £37 billion per year—86% of that falling on women, of course. A two-week grant, costing between £400 million to £600 million, combined with four weeks until first payment, could indeed transform lives for the better. It could be a grant financed, perhaps, by last year’s £680 million underspend on tax credits, as pointed out by the OBR. People are so scared out there. The work and pensions evidence that I have here is completely draining in its wretchedness.

Two people are facing Christmas. Donna—UCR 0060—is a lone parent with three children, who has been working zero-hour contracts, on UC, for 18 months. When her hours were cut as a ZHC worker, as little work was available, she tried to get an advance payment but was told—correctly, according to the rules—that it was too late. It was her fault, they said—she should have budgeted better. She says, “I wanted to say, ‘You don’t know my situation. I work, I work, 40 hours a week if I can get it. You don’t know how hard this has been. I’m a person!’”.

Steve, a 55 year-old maintenance engineer, was made redundant in April 2016. After four visits and three months, he got his first payment. The stress and fear led to angina and he was hospitalised, so he missed an interview and was sanctioned for two months. The resulting rent arrears of £1,000 meant that he lost his home. He did everything right. We did everything wrong. We broke our promises—and we broke him with it. What Christmas is there for Donna or Steve? We can and must do better than this. Sir John Major said last month that UC was,

“operationally messy, socially unfair and unforgiving”.

Was he wrong? I beg to move.

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My Lords, this debate is very well subscribed and is taking place within a tight timetable. I urge all noble Lords to stick within the five-minute limit.

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My Lords, I am grateful to the noble Baroness, Lady Hollis, for giving us the opportunity to discuss this issue, which affects so many lives, both directly and indirectly, in terms of the confidence the general public has in our welfare system. It is vital to stand back and assess what universal credit—UC—is trying to achieve.

If we had not, with our coalition partners, invented and implemented UC, the ineffectiveness of the legacy welfare system would have been a running sore in political debate that would have become a dangerous fault line as we approach Brexit. It would have been far too late to make any meaningful reform, but there would have been urgent calls for it, given the acute labour shortages we would be facing as the number of migrant workers willing to do jobs left vacant by British workers reduced.

Related to this, and before Brexit became an issue, the high unemployment rates that welfare reform has helped us to avoid would have undermined the whole of society. Human dignity is deeply affected by lack of work. For example, while it is a complex picture, Understanding Society data suggests that longer-term unemployment is associated with obesity. This badly affects confidence and employability and thereby further traps someone in a pernicious cycle of poor health and unpromising life chances.

Writing about the legacy benefit system, one of our foremost experts, Nick Timmins, said,

“Like many others, I had come by the mid-to-late 2000s to recognise that it had become horrendously complicated—both in the way it handled the absence of work and in the support it offered once people were in low-paid jobs”.

He notes its incomprehensibility to claimants and administration staff alike, the billions of pounds-worth of unintended error every year, and how it “almost actively encouraged fraud”. Substantial reform was particularly important because moving into low-paid work for those out of it for any length of time felt very risky. It could take weeks to sort out a fresh claim for benefit if the job failed, hence unemployment existing alongside high vacancy rates. He and Professor Roy Sainsbury, an early proponent of a “single working-age benefit”, saw UC as,

“essentially a technocratic change … an apolitical idea that was not rooted in any ideology at all”.

Thus, my concern is that UC has become unhelpfully politicised—a stick with which to beat the Government regardless of the broad sweep of positive outcomes, and the subject of inaccurate and shameful scaremongering.

For example, during Prime Minister’s Question Time in the other place on 11 October, the Leader of the Opposition claimed that Gloucester City Homes had evicted “one in eight” of their tenants—650 in total—due to UC. However, in actuality eight people, all of whom had significant debt arrears before UC was introduced, were evicted. Richard Graham, Conservative MP for Gloucester, flagged up as a point of order that,

“the picture painted by the Leader of the Opposition yesterday was a long way from the true situation”.—[Official Report, Commons, 12/10/17; col. 497.]

The impression has also been given that there will be a big bang in UC rollout just before Christmas, when most families already feel nervous about their finances. However, the pace of the test, learn and rectify process is staying steady and the proportion of the forecast claimant population receiving UC will reach 10% by the end of January, as preannounced. On the subject of test and learn, can the Minister inform the House what progress has been made in developing universal support, which will help people with debt and other disadvantages as they become used to the new system?

Finally, there will be a projected £70 billion in savings to the public purse as a result of the shift away from the legacy benefit system, not because of parsimony, but because of people moving into work. Have the Government modelled if and how savings might be improved by lowering taper rates still further than the recent drop from 65% to 63%, albeit at an up-front cost of £1 billion over five years? There would be a similar cost in reducing the taper rates from 63% to 60%. But what would be the likely return to the Exchequer, given that lower taper rates—and of course improved work allowances—increase work incentives?

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My Lords, I thank my noble friend Lady Hollis for holding this debate today. She is a consistently powerful voice for those who too often have no voice of their own, and I admire her greatly for it.

During 10 years working in the Treasury, I was privileged to play a small part in the introduction of the tax credit system. The principles underpinning those reforms remain relevant and right: to ensure work always pays more than welfare, to prioritise support for children, and in so doing to reduce child poverty.

Tax credits boosted the incomes of the poorest families, lifted millions of children out of poverty and helped many, including many lone parents, into work. Originally, universal credit looked to build upon the principles of these reforms. One benefit rather than six should help improve the visibility of rewards for work, boost take-up, and ensure claimants receive the money they are entitled to. Most importantly, the single taper is the embodiment of the “making work pay” goal, which should in theory greatly strengthen work incentives. Such a bold and far-reaching reform would, I think, have appealed to the Treasury I knew and the Chancellor I served. Unfortunately, under this Government a number of serious flaws now put the original aims at risk.

With relatively few working families currently on universal credit, the six-week lack of income is right now the most visible problem. But, in time, the consequences of the very significant cuts made to in-work support since the reforms were first announced will do even greater damage to the lives of the very families universal credit was created to help. The steady accumulation of cuts means universal credit will now be £3 billion a year less generous than the tax credit system it replaces. Some 3.2 million working families will be worse off, with an average loss of £48 a week. Some 600,000 of these will no longer be entitled to any support at all. Families with children will be hardest hit, with lone parents losing an average of £26 a week. Why, then, given the damage they will do, have these cuts been made?

The first reason is the previous Chancellor’s decision not just to reduce the deficit, which was of course a necessity after the financial crisis, but to tighten his fiscal rules still further, aiming to run a surplus. He made this not just an economic priority but an ideological goal, claiming that not doing so would be more than an economic failing: it would be a moral failing. Yet the Government have failed to meet a single one of the fiscal targets, and Britain now faces a third consecutive Parliament of austerity.

The second reason for these cuts is the choices the Government made about how to allocate resources within this fiscal straitjacket. At the same time as the previous Chancellor chose to cut working-age benefits in 2015, the Government also chose to cut £8 billion from inheritance tax. Indeed, since David Cameron introduced what he called “the age of austerity” in 2010, a cumulative total of £78 billion will have been spent by this Government cutting inheritance tax, all the while cutting £3 billion a year from low-income and middle-income families.

The IFS has calculated the distributional impact of changes to tax and benefits since 2015. The entire bottom half of the income distribution will see their incomes fall. The second-poorest decile will lose over £1,600 a year, while the second-richest will gain £400 a year. While the second decile will see an 8% fall in their income, the ninth decile will see a 2% rise. These are quite some choices the Government have made. They are not the inevitable consequences of reducing the deficit, nor the necessary result of living within our means, but deliberate policy choices reflecting their values: the choice to cut ever deeper into working families’ incomes, not out of economic necessity but ideological determination; the choice to cut £3 billion a year from the very poorest in society, while finding nearly £80 billion for the very richest; and the choice to see not meeting deficit targets as a moral failure, while failing to even measure child poverty targets.

You can see why. By cutting support for working families with children, the introduction of universal credit, far from reducing child poverty, will now increase it by over 1 million to 5.2 million, the highest ever level since records began. With 68% of children in poverty living in working households, universal credit should be tackling the problem of low pay, yet in fact it now does almost nothing to improve financial incentives. Working 25 hours a week will now leave a lone parent only £2 better off than working 16 hours under tax credits. Second earners will now keep only 37% of their pay. A family paying for childcare for two pre-school-age children will now keep only 6p in the pound, an effective marginal tax rate of 94%.

These reforms break the Government’s promise that work would always pay more than benefits, they betray a generation of children, and they expose a Government systematically targeting the poorest in our society while handing billions back to the better-off.

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My Lords, I thank the noble Baroness, Lady Hollis, for enabling us to have this debate and for her forensic examination of the problems of universal credit. This debate is important for two reasons: first, the evidence is now conclusive that there is a major problem with the rollout of universal credit and, secondly, there is an opportunity for the Chancellor to do something about it in the Budget next week.

The evidence shows that the way universal credit is working is forcing more and more poor people into rent arrears and into greater use of food banks. The Trussell Trust has demonstrated that in those areas where universal credit has been introduced, the use of food banks has increased by nearly one-third compared with just over 10% in those places it has not been introduced. As we get closer to Christmas, those pressures will worsen.

The principles behind universal credit remain important. We need a simplified benefit system, and work should pay. However, the problems that have arisen suggest that the rollout of universal credit should be paused until those problems have been resolved. First, we have to shorten the period that recipients have to wait for their payment. It is unreasonable to make people wait for six weeks, given that they are inevitably people with few resources. Secondly, monthly payments are intended to replicate the world of work, but how many monthly-paid employees would be happy to wait for their money until at least seven days into the next month? Anyway, 10% of all employees are actually paid weekly. Why should universal credit claimants be treated differently from weekly wage earners? Thirdly, around 20% of those entitled to a full payment face delays caused by forms being incorrectly completed. Many of these people need help completing forms, and the Government have to do more by building in the availability of personal help to their standard procedures. They should not assume that everyone has the capacity to fill in the forms themselves.

I am grateful to Thirteen Housing Group, which manages nearly 33,000 properties, mostly in Tees Valley, for its advice on universal credit in Hartlepool, where full service went live last December. Its figures on housing debt are disturbing. I remind the noble Lord, Lord Farmer, that the level of debt caused by universal credit is real and not scaremongering. At the end of August this year, the average debt of universal credit recipients who were tenants of Thirteen Housing Group was £722.66, compared to an average debt of £418.92 for all Thirteen Housing Group tenants. As for the numbers of individuals affected by debt caused by universal credit, 1,008 out of 1,229 in Hartlepool—that is 82% of all those in receipt of universal credit—were in debt in August. This compares with 11,524 tenants out of more than 32,000 customers across the whole of the Thirteen Housing Group—that is 36%—who were in debt at that time.

The evidence that the operation of universal credit is causing rising debt and increasing worries to tenants is now clear for all to see. Surely the basic principle should be this: tenants need to receive the right amount of money at the right time to pay their rent and not get into arrears. I hope that the Minister will agree, when she comes to sum up, that the time has come for the Government to make reform of universal credit a priority. I hope very much that the Chancellor will do that next week.

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My Lords, universal credit is an essential element in the Government’s amazingly successful strategy of getting more people into work or back to work. The latest unemployment statistics are the lowest since 1975; since 2010, more than 3 million more people are working in this country. Sadly, this great advance is decried or forgotten by those who look for every opportunity to belittle the universal credit project. As I said, it is work in progress.

For many years, I saw long lines of unemployed people standing in the rain outside jobcentres, and it should never happen again. How many of us here remember the poster in the winter of discontent prior to the 1979 general election saying, “Labour isn’t working”? Of course, I am as concerned as anyone else in this Chamber that there are glitches in the workings of the system involved. That is nothing to be amazed at, although it is certainly worrying. However, the glitches we have had in the IT systems throughout Parliament and throughout this Government are being tackled. These glitches are being tackled, and they will be overcome. The system is much more transparent than previous benefit systems. I have heard of most encouraging attitudes prevailing among the job coaches in the jobcentres.

We have heard from the noble Baroness, Lady Hollis, that 87 jobcentres are closed or closing. That does not meet the point that more and more jobs are being filled. That is ongoing at the same time as the jobcentres are closing. Perhaps they are becoming much more efficient, or perhaps they have the answer to the digital works that are going on at the moment. The people in the jobcentres would certainly not like to hear what we have heard already today: they are dedicated and working very hard. They believe, as I believe and as everybody round here should believe, that everybody should have the right to work. It increases people’s self-esteem—the benefits, including fewer mental health problems are well known—and pride. Pride is supposed to be a mortal sin—I am looking at the right reverend Prelate—but I am sure that it is not. If you have pride in your work and pride in your ability to get a job it is not a sin at all, I think it is a case of “Hoorah”.

These projects are being tackled and what we really need to know from the Minister is the plan for dealing with all these universal credit glitches. Will it take six months, 12 months, two years? It is a massive task. We have only to listen to all the contributions from the other side to realise how massively complicated and important it is. Nothing is perfect, but let us give people encouragement, not discouragement. Reading Hansard would be a real disaster for people who are working their socks off. Let us be fair: every effort is being made to introduce the system without delays. I am sure that there is nobody in the jobcentres, no job coach, who says, “Let us delay this by six months” or eight or 10 months. I just do not believe that British people would be doing that. Every effort is being made to introduce the system without delays, I am sure of that.

The project has a large learning curve for those who are not exactly financially literate. The noble Lord, Lord Shipley, talked about the problems that applicants have with form filling, et cetera. That can cause endless delays. You only had to be in the Moses Room when we were all trying to grapple with the new system on digital skills to realise that even we can have difficulty grasping such an issue. Financial literacy is a problem but it can be overcome. In discussion with a colleague earlier today—I will not mention their name—my attention was drawn to the Bill setting up financial guidance, the Financial Guidance and Claims Bill, which has all-party agreement and will have its Third Reading shortly. The Government have proved that they can restore feelings of self-worth by helping the out of work back into work; let us give them a fair wind.

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My Lords, the rollout of universal credit must be rooted in the claimants’ real world of squeezed wages, job insecurity and household incomes under pressure. Evidence consistently identifies people’s low financial resilience and rising indebtedness: 17.3 million working-age adults do not have £100 saved; £200 billion is owed in consumer credit, excluding mortgages; 4.1 million people have failed to pay domestic bills or meet credit commitments in three or more of the last six months.

The majority of universal credit claimants arrive with pre-existing debt and no financial resilience. As the Secretary of State said: “We are able to make an estimate” of a UC payment “particularly given that it is likely that a lot of those people seeking advances will not have any alternative income over that first assessment period”. Citizens Advice confirms that claimants risk serious debt from delayed payments, that 79% have priority debts such as rent or council tax and that two in five have no money to pay creditors. I say to the noble Lord, Lord Farmer, it is not the concept of universal credit but the compromise on the essential design feature that it will make work pay that is the fundamental concern here.

The accumulation of benefit cuts is a major drag on the living standards of families on low and middle incomes. The Rowntree Foundation predicts that the four-year benefit freeze will increase poverty more than any other policy.

Universal credit was designed to focus on reducing worklessness, which is now at an all-time low. In-work poverty is now the increasing challenge. The wait of six weeks or more from claim to payment is a design flaw baked into the system and can be punitive, however nice the jobcentre staff are. Over 50% of claimants claim an advance, because they simply cannot cope with that delay. Its stated purpose—to reflect a world of work where wages are paid monthly in arrears—does not reflect the world of the claimants. As has been said, they are paid weekly or fortnightly. As rollout increases, identified problems just become more pervasive and extensive.

The Government look to mitigate by increasing take-up of advance payments, asserting that such a system is the best way of spreading out their income. In reality, it has limited efficiency. The six weeks is still unmanageable for the majority without incurring debt to the state or a private lender. An advance has to be paid back in six months when claimants also face deductions for debts from council tax, utility bills and rent arrears. For the Government to rely so heavily on advance payments defers the problem and embeds debt as the default for claimants as a matter of public policy. It would be far better if the six-week period were reduced and the benefit freeze reappraised. The Government need to pause the rollout and reassess.

Finally, the Government introduced the two-child limit on the payment of child tax credit and the child element of universal credit to deter people from having more children and to reflect carefully on their readiness to support an additional child. Noble Lords argued that this limit should not apply to kinship carers—who often have their own children—who take on the care of vulnerable children to whom they have not given birth. There are more than 200,000 such children, saving the taxpayer the £40,000 cost of placing each child in foster care. The two-child limit was a non sequitur for kinship carers. The need was not for them to reflect carefully on their readiness to support a vulnerable child, the need was to support their readiness to do so. The noble Lord, Lord Freud, reflected and accepted this, stating:

“I am pleased to announce … that in recognition of the important role which family and close friends can play in caring long term for children who are unable to live with their parents and could otherwise be at risk of entering the care system, we are in favour of an exemption for children in such circumstances”.—[Official Report, 27/1/16; col. 1295.]

That concession is, shamefully, not being honoured. It is applied only if kinship carers had their own birth children before taking on the kinship children. If they take on the care first, then have a birth child, the exemption does not apply. Alyssa Vessey, who was 18 when her mother died suddenly, went to social services and told them she would raise her three young siblings on her own, to protect them from going into care. Four years later she had a partner, and had her own birth child. Alyssa was refused tax credits and a Sure Start maternity grant because she had breached the two-child limit. The DWP is reported as saying that the decision ensured fairness between the claimants and taxpayers. I say that Alyssa saved the taxpayer around £40,000 for each child not going into the care system— £120,000 per annum—plus £25,000 of care proceedings costs, together with the miserable saving of not paying her a maternity grant. A similarly affected pregnant kinship carer was advised by her local office that if she gave up caring for the kinship children, had her baby, then took them back at a later date, she would be eligible for benefits for both her birth child and the cared-for children. On any analysis of public policy, that is not honourable.

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My Lords, I, too, thank the noble Baroness, Lady Hollis, for obtaining this very important debate. I recognise that the aim of universal credit was indeed to improve incentives to work and, along with others, I strongly support that objective—if only the policy would deliver it as originally planned. The only tool now left to the Government to drive people into work is the cruel application of sanctions to these incredibly vulnerable people. The huge problem for claimants is that the new system, good though it originally was, is being rolled out in the context of an extraordinary level of cuts to welfare benefits. The net effect of these cuts for disabled people, carers and single parents—the most vulnerable citizens in this country—is quite simply devastating. They face inevitable soaring debts completely outside their control, the risk of homelessness, acute anxiety and distress. These benefit cuts include, as most noble Lords here know, the benefit cap, the bedroom tax, the cut to council tax benefit, the failure to meet the whole of a claimant’s rent, the working-age benefits freeze and cuts to work allowances—to name just a few.

Let us focus for a minute on disabled people, who are affected by all the above cuts and more. The Government rightly announced their intention to halve the employment gap between able-bodied and disabled people. Well, sadly, universal credit is destroying this ambition—not the intention of the original designers, no doubt. There will in fact be reduced support for working people with disabilities, particularly for those with children. Many are being shifted from the higher employment support allowance to the lower-level benefit of jobseeker’s allowance. Working tax credit includes a disability element worth £54 a week, which is a lot of money for somebody on a very low income. Universal credit reduces that substantially for some of those people and eliminates it altogether for others.

Another devastating cut for disabled people is the severe disability premium, which has been an additional sum added to the employment support allowance for a subset of severely disabled people. This benefit is being scrapped under universal credit—a loss to these severely disabled people of £62 per week or £3,200 per year. It is almost difficult to believe these sums. The whole point of these disability additions was to cover the extra costs of working for very severely or severely disabled people, thus enabling them to get to work.

If the Minister would be interested to see the full impact for claimants of the rollout of universal credit, she may be interested in a recently published book by Sam Royston, Broken Benefits: What’s Gone Wrong with Welfare Reform. It is in the context of these swingeing cuts that the minimum wait of six weeks is utterly devastating for people, and we know from the DWP’s own data that 20% of people wait longer than six weeks for their first payment. Some wait for up to 10 weeks. Does the Minister accept that there is an urgent need to expand universal support to help people reduce the waiting period? I would be grateful for an assurance from the Minister on this point.

Another issue which I implore the Minister to look into and rectify—this is absolutely appalling for some people—is that claimants whose most recent employer just happens to make a final payment, maybe of statutory sick pay, a day or so after the claimant’s assessment period begins will receive precisely zero in their first so-called “universal credit payment”. They will get nothing at the end of six or even 10 weeks. It is a very specific problem for certain people whose employer just happens to do something that is just devastating for them.

The Government point to advance payments as a solution for claimants, but these payments cover only 2 weeks’ costs and are just another debt which is later deducted from benefit. Claimants are then left with almost nothing to live on week after week and month after month as their rent arrears, council tax, other debts and advance payments are being repaid.

Another problem is that universal credit is paid monthly, as other noble Lords have mentioned, when 58% of these claimants are just not used to that. They have never lived like that. They were paid fortnightly or weekly. Will the Minister please look into the possibility of reversing that system?

Finally, will the Minister think again about the Government’s resistance to paying rent direct to landlords? Again, other noble Lords have mentioned this point. It sounds simple, but if you have, for example, learning difficulties, it is incredibly difficult to manage a chunk of money that has got to last for a month and to find your rent at the end of the day.

Before ending, I want to pay tribute to the CAB, the Joseph Rowntree Foundation and others for their helpful briefings. In reality, rising debt, huge levels of stress and parents choosing not to eat in order to try to pay their bills are the result of this government policy. Universal credit and its accompanying cuts are generating a humanitarian crisis that ill befits this very rich country. Along with colleagues on all sides of the House, I hope that the Minister will give an assurance that the universal credit rollout will be halted while some of the worst features are rectified. If not, will the Minister explain how this policy tallies with his commitment to help those who are only just managing?

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My Lords, I draw the attention of Members to my interests in the register. I also congratulate my colleague and noble friend Lady Hollis on getting this debate. I want to raise two practical problems that I know, from my experience, are already happening with early claimants of universal credit.

First, I echo the points made by my noble friend Lady Drake about the problems arising with the two-child limit and its effect on kinship carers. I hope that the Minister has been well briefed on the debates that we had in this House on the Welfare Reform and Work Bill, when we were told that kinship carers would be exempt from the two-child rule. Unfortunately, the regulations subsequently issued have left a loophole, which my noble friend Lady Drake explained well. A kinship carer is unable to claim child tax credit for any baby to which they give birth if there are already two or more children in the household—even if they are looking after those children because the natural parents are not able to do so. This is not in the spirit of the debates that we had during the passage of the Bill or in the spirit of the speech—the gracious speech, I might say—made by the Minister in conceding on this issue. I hope that this is a mistake and that the Minister will be able to reassure those of us who were active around this issue that the regulations will be corrected to get back to the promise made. Children from the extended family whose natural parents are not able to care for them should not be part of the two-child rule in any circumstances.

I ask the Government to link this to the knowledge that, other than in some boroughs in London, the north-east has the highest proportion of kinship carers in the country, as well as having among the lowest wage rates in the country and the highest number of children in poverty. These things come together and the Government need to pay attention to these people, who really have been left behind.

Secondly, I chair a charity called Changing Lives, which is based in the north-east but also works across Yorkshire, in Merseyside, in other parts of the north-west and in the West Midlands. We work with people with multiple and complex needs, women as well as men. We run the Fulfilling Lives project, funded by the Big Lottery, in Newcastle and Gateshead. It is a long-term project, working with service deliverers on seeking a more holistic response for people with complex needs. Newcastle was nominated as a “test and learn” city for the rollout of universal credit. That means we have been helping some of our clients navigate their way through the new system. For the most vulnerable clients, universal credit is a real problem. In the Fulfilling Lives programme we use a navigator, who works one-to-one with individual service users.

The whole programme is proving exceptionally difficult. Many of the people we are working with are still a long way away from the labour market. As an organisation, Changing Lives has an unrivalled record in getting many of our clients work-fit and into work, but it is often a very long and difficult process. With the most vulnerable, universal credit is, ironically, making it more difficult, not more straightforward, to get them job-ready and into whatever jobs are available. I do not have time to raise the case studies today, but if the Minister would find it useful, I will send her more details.

In the main charity, we have been innovative both with Housing First and with bringing empty properties back into use for homeless people. We have dome more than any other organisation in the country on these programmes. In Newcastle, with full rollout of universal credit, we are now seeing arrears of 23% compared to arrears in the rest of the country, in programmes that we are working with, of only 6%. Every universal credit claimant whom we are working with is in arrears. The level of arrears for the charity from universal credit claimants is £51,620.13 as of yesterday. In Home Life, 22 out of 27 tenancies have arrears of over £1,000. People who fall into arrears generally do not get back out. We as a charity are having to budget for increased arrears as universal credit is rolled out. I simply ask the Minister to reflect on this and to consider the devastating effect on those individuals who are trying to put their lives back together.

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My Lords, the five-minute margin that we had in the bank has already been eroded. I urge noble Lords to try to stick within the five-minute limit.

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My Lords, I will do my best. I begin by adding my thanks to the noble Baroness, Lady Hollis, for introducing the debate and doing so in a speech that was both powerful and elegant.

It is not just the road to hell that is paved with good intentions. I often thought of that when, as a constituency Member of Parliament, I was besieged by constituents who fell victim to another good idea, the CSA. Any Member of Parliament who remembers that knows it is difficult to get it right. I do not doubt for a moment the good intentions of those who brought in universal credit, but they have not got it right. Last week, I entertained to lunch a godson of mine, who is the vicar of two parishes in a very deprived urban area of Lancashire. We talked about some of his problems. I asked him to give me a few examples for this debate—something specific from the coalface. He has done so. He says:

“To manage the flow of clients, each person is given a day and time to sign on. They are sanctioned”—

we have heard about that already—

“if they don’t sign in, or try to sign in at a different time. In August, the DWP computer went down for about an hour. All the claimants who should have signed on during that period clearly could not do so. Each was sanctioned … About a year ago, every claimant on one particular day was sent a letter with the wrong signing-in date (the times were correct). All clients arrived at the correct time but one day late. The staff openly admitted the error but … every person … was sanctioned … There are countless cases of people being sanctioned for missing appointments, and probably they received their appointment letter after the date of the appointment. Staff at the Job Centre receive a bonus if they can move people off Universal Credit. The intended method is clearly for them to help clients to move on to gainful employment”—

which is very good, but—

“the staff … have targets and … we have evidence of people being sanctioned and/or denied Universal Credit with no apparent reason because ‘They can always appeal afterwards’ ... which can represent months with no money whatsoever. A young lady moved to a different address. The Job Centre Plus was informed of the move. Initially her post was sent to the new address. ‘Inexplicably’, the young lady was sanctioned”,

because they had been sending things to the old address.

This is a catalogue of human errors but it is also a catalogue of human misery. He told me of another very bad case:

“A man in his mid-forties who suffers from learning difficulties, and mental and physical illnesses, was homeless but still in receipt of benefits (not Universal Credit). He found a private landlord who was willing to offer him a property with no deposit. Upon applying for housing benefit, he was told that he was deemed to be changing his circumstances and had to make a claim for Universal Credit. This took fourteen weeks for processing. The landlord was unwilling to wait that long for rent so the man became homeless again”.

He goes on. This is something we really should not accept in a civilised age. I do not question the integrity or good intentions of any Minister or any worker in any office, but we should remember that old adage, “If it ain’t broke, don’t fix it”. This is broke and it needs fixing and I appeal to the Chancellor next week to set about the task of fixing it.

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My Lords, it is always a pleasure to follow the noble Lord, Lord Cormack, and it is a privilege to take part in this debate. What a tour de force we have had. We would have expected nothing else from my noble friend.

In Wales since April this year, jobcentres in five local authorities have gone into full service. Swansea will follow in December. By 2022, 400,000 households will be on UC, including 13% of the population of Wales. All the problems that we have heard about around the House today have already surfaced in Wales—and quite acutely. Wales remains an exceptionally poor country, despite much effort. The design flaws of universal credit are making life utterly desolate for many people in the post-industrial belt of south-east Wales, the remote rural north and west and in the very poor coastal communities of the north. They are communities that want nothing more than decent work and decent prospects but they want to be sure that work really does pay. They are the communities worst hit by austerity and worst hit now by the failures of universal credit.

When a family in Tredegar or Wrexham finds itself waiting six or seven weeks for money there is nobody they can call on, but the doorstep sharks will be there within seconds. When a young woman in Pembrokeshire tells her Assembly Member how scared she is that she is about to lose 63 pence in every pound once UC is rolled out, it should be clear that this not an incentive to work but a real threat. The CABs in Wales have no doubt that the system is failing. It is driving up debt and despair, as we have heard. There is incorrect information, the sanctions—as we have just heard from the noble Lord—a steady increase in the number of people using food banks and a doubling of food vouchers. I am very grateful to the CABs in Torfaen and Flintshire for this sort of information.

What makes this so tragic and intolerable is that it was avoidable. The Government were warned time and again by their own experts, the Social Security Advisory Committee, and even by the Secondary Legislation Committee of this House, which does not use strong language lightly, that they did not have the evidence to determine full social impact, especially about waiting times, and that they might do great damage. Did they listen? They did not. I really hope that the Minister—for whom we have great respect—will not take refuge in the fact that a proportion of people in the greatest distress are now managing because they have received an advance payment. We are concerned with the many people who are not receiving, and are not likely to receive, advance payments. The consequences for them are cumulative and, indeed, catastrophic.

I hope we will not hear the Minister say that these are rare cases. They are not. They should not come as a surprise. They are the predictable result of a system that has been flawed from the beginning for all the reasons we have heard. The problems come when human error and a systems failure collide. For example, in Flintshire, one of the poorest coastal areas of Wales, the CAB has kept a diary: 76 people came in August—four people a day; 24% needed help with the calculation of benefit and 16% with the housing element. Half already had a long-term health condition or disability. For example, a young woman of 18 with a child, and therefore eligible for UC, tried several times to apply online but her claim was not accepted. When she answered no to the question, “Are you over 18?”, it would not let her continue with her application.

The CAB phoned the helpline and was kept on hold for 40 minutes. Staff were uncertain what to do—flummoxed, in fact—then recommended that she made a special circumstances case in person at the Jobcentre. In the meantime, she has been living on £20.70 a week child benefit to survive. I could not live on that for a day and I doubt that the Minister could.

There is another case of a lady who is disabled and uses a wheelchair. She moved from income support to UC in June. She was previously getting full housing benefit paid directly to her landlord, Flintshire County Council. She is now having real problems getting the housing element paid, has rent arrears and is at risk of eviction. We could multiply these case all over the country.

We know the prescription, and the Minister has already been told. The CAB has a shortlist of three items: remove the seven waiting days at the start of a claim; allow people to adjust to universal credit by offering everyone a choice of how they would like the benefit to be paid; and ensure that the people who need it get a first payment within two weeks, which they do not pay back. That is straightforward. We know that we have a weak Government and we know they are a discredited Government, but they are not so weak that they cannot address social injustice.

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My Lords, I, too, congratulate the noble Baroness, Lady Hollis, on securing this debate and on her introduction.

Universal credit originally set out to simplify a fragmented, complex system and to reduce poverty through the simple, noble philosophy of making work pay. While it still has the potential to transform this broken system, its current shape risks undermining these two core objectives for the neediest in the nation and thus failing British families. Almost every week, I receive heart-breaking stories about how the transition to UC is devastating the lives of claimants. What does the five or six-week waiting period, which is often longer, actually look like for a family or single parent with young children?

One young mum visits St Aidan’s church kitchen in Hartlepool with her disabled son. She was moved on to universal credit and waited seven weeks for her money. She told one of my clergy that she took paper napkins from McDonald’s because she was unable to afford toilet paper. Her son’s condition means that he wears nappies, which she was also unable to afford. Can any of us here imagine the stress and indignity of such a situation? Despite now receiving her money, the majority of her payments go towards her rent arrears, so she is still dependent on St Aidan’s for a meal and food each week. Her story is one of many I hear of families and individuals falling down a slippery slope of rent arrears, personal debt, eviction and homelessness.

It is too simplistic, however, to say that UC alone pushes families into debt. In many cases it exacerbates existing personal debt, and makes that debt almost impossible to escape. This is particularly acute in the north-east. In Hartlepool, Gateshead and County Durham, more than 30% of adults are indebted and at least three months behind with their bills, compared to a national average of 18%. This will only intensify as payday loan sharks and doorstep lenders increase their work and their profits.

Advance payments are designed to give financial support through the waiting period. The fact that over half of all claimants on universal credit are now asking for these payments, however, shows a system that is flawed. These payments are loans that must be repaid. Citizens Advice Newcastle reports that one in three of the claimants they meet waits more than six weeks, and one in 10 waits more than 10 weeks, for their first payment, forcing over half of claimants to borrow money. Such arrangements perpetuate a cycle of household debt and dependency—the very thing that UC set out to combat. Something must be done to ensure that during this time claimants can meet the basic costs of rent, childcare and food for their family.

As the noble Baroness, Lady Meacher, mentioned, a specific problem which causes further delays for many new claimants is when they lose their job and receive their final pay in arrears. If this final payment comes in during the assessment period, their first UC payment is reduced accordingly, so they will have to wait another four weeks—at least 10 weeks in total—before getting their full UC entitlement. It is ironic that a system based on paying people in arrears is unable to deal with people being paid their wages or salaries in arrears. Will the Minister say whether and when this problem will be rectified?

By focusing on the short-term impacts of UC, we risk missing the longer-term picture. The decision not to uprate the main elements of UC in line with inflation means that around 400,000 more children will be in poverty, according to estimates by the Joseph Rowntree Foundation.

Had I more time, I would also have discussed the cuts to work allowance and why the taper should be not at 63% but at the original proposed 55%. These cuts are further undermining the most fundamental objective of universal credit: to make work pay.

Finally, I draw your Lordships’ attention to another longer-term facet of UC: the two-child limit. I believe that this will not reduce poverty or make work pay but will be responsible for another 200,000 children living in poverty. Larger families stand to lose almost £3,000 annually for each child beyond the first two. The majority affected are working families, many of whom had children before the policy came into being. What kind of message about the rewards of work does this send to British families? I speak both from my own Christian tradition and also on behalf of the Jewish and Muslim communities, who recognise that children are a blessing and not a burden. We hold that the third, fourth or fifth child is no less precious than the first.

Recent IFS projections anticipate that, in the next five years, the north-east will witness the biggest rise in child poverty of all UK regions—from 28.2% to 39.7%. That is a rise of 11.5%, compared with the UK average of 6.8%. A gulf appears to exist between those of us who make policy decisions and those for whom they are designed. I beseech the Minister to listen not necessarily to us but to the claimants and to some of the staff in the jobcentres, who tell us that we are not succeeding with the original intent. Please keep and return to the original intent of UC—to make work pay and reduce poverty—and recognise that its current rollout is not producing the desired results for the most needy in this country.

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My Lords, I thank my noble friend Lady Hollis. We met in the corridor and, within 10 minutes, I found myself putting my name down to speak—something I had had no intention of doing when I started my journey. When I began to read and to receive information on this subject, I realised that I was living in cloud-cuckoo-land. It was devastating for me, who thought that I cared about people.

So far, we have heard about the impact that universal credit is having both in broad terms and on different and often vulnerable groups. I should like to add a few words about how this policy is affecting claimants from black and ethnic minority backgrounds in particular. They are being told by workers in the social security offices, “You blacks should go out and work like the rest of us”. When you are hungry, you never need to hear words like those—but they were repeated to me on more than one occasion.

Research from the Race Equality Foundation has found that the black and ethnic minority community is likely to be disproportionately impacted by universal credit. The Government’s own figures project that 16% of universal credit claimants will be from BME backgrounds. This is a higher proportion than in the population as a whole. It is not because they do not want to work but because they are dealing daily with the myth of white superiority. That there are people in those offices creating that sort of feeling in people who are desperate should frighten us all. It certainly frightens me.

There are a few reasons why universal credit may have more of a severe impact on BME claimants. First, BME families are more likely to be living in poverty and receiving benefits in the first place, so any delays in universal credit payments will hit their ability to pay harder than most and force them into debt. Having to choose between heating and eating has no place in a country like Britain, which is richer than most.

Secondly, BME claimants have higher rates of digital exclusion, making it harder for them to engage with universal credit in the first place. The language barriers that exist within some BME communities also make it harder for these communities to claim—however good universal credit is—and push them into further hardship.

Lastly, because BME families are usually larger, they will be harder hit by reducing payments and having to wait a very long time to receive them. This reduces the incentive to work and BME children are being pushed into poverty as a result of this programme. Imagine for one moment that you have to decide, “Do I give my children breakfast or do I save it for the evening meal?”. This happens in our wonderful Britain.

There is a need to review many aspects of universal credit—not least due to the disproportionate impact on many British citizens, whatever their colour or status. I hope that the Minister will take note and listen—as I saw her doing earlier to everyone who has had something to say. There is quite a lot that is good about universal credit, but it has to be distributed fairly and quickly. The calls today have all been for dealing with universal credit in a humane way.

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My Lords, I thank the noble Baroness, Lady Hollis of Heigham, for this important opportunity to focus on the sustainability of the welfare system. As a Conservative committed to social justice, I am proud that a Conservative Government have had the courage, vision and political will to introduce universal credit. This is a monumental step change which is putting our welfare system on to a sustainable footing for the future.

I come to this issue as someone who is a benefit claimant. In the past I have claimed incapacity benefit and I claim disability living allowance now to help meet the extra costs of my disability, so I declare a vested interest. Indeed, I depend on a welfare system that is sustainable. I have no vested interest in patronising either disabled or non-disabled claimants of universal credit by implying that somehow it does not really matter whether the welfare system is sustainable. The noble Lord, Lord Livermore, mentioned ideology. I do not subscribe to the ideology that digging ourselves, as a country, ever deeper into debt will somehow not have painful repercussions further down the line, especially for those who most depend on the welfare state and who can therefore least afford for it to be unsustainable.

Reforming the benefits system of the past so that it is fit for purpose for the future is a huge undertaking, as we have already heard. Indeed, how could it not be? What systemic change process does not generate situations from which we can learn? We have heard of such situations. That is why I welcome the Government’s emphasis on a gradual introduction of universal credit. It is also why I welcome their renewed efforts to make people aware that advances of universal credit are available for those who need it—either within five working days or, if a person is in immediate need, on the same day—and that the rent of people who need extra support with managing their budget can be paid directly to their landlords.

What I cannot welcome is how, in the cut and thrust of Prime Minister’s Questions recently, some on the hard left have risked exacerbating vulnerable people’s fears. Of course it is entirely legitimate to highlight individual cases, but the scaremongering that we have seen in the other place—for example, the suggestion that the universal credit inquiry line is a premium-rate number, when everyone knows that it never has been—helps no one. I thank the Government for countering the scaremongering by making it a freephone number.

A number of disability organisations contacted me rather late in the day about this debate. Time does not allow me to go into the detail, but would my noble friend the Minister be willing to meet me to discuss some of the points that they have made?

In the meantime, and in conclusion, I do not question any noble Lord’s integrity, but there is a fine balance to be struck between highlighting individual cases and misrepresenting universal credit as a whole, as has happened in the other place—as my noble friend Lord Famer highlighted earlier in this important debate. We all know that no one gains if people in real need are frightened off from making a claim when what they need to hear is reassurance that the impact of universal credit is overwhelmingly positive; that it is helping to make the welfare system sustainable for the future, for both the claimant and the taxpayer; that it is being introduced gradually and carefully over the next five years; and that prompt help for those in real difficulty is available.

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My Lords, I congratulate my noble friend Lady Hollis on this debate and for opening it so eloquently but, I have to say, I take no pleasure in taking part in it. I wish it was a debate that we did not have to have. I wish that universal credit was working and that it was indeed fit for purpose.

It helps absolutely no one to say that universal credit is being politicised. This is not about party politics; it is about people who are suffering, who are in need and in debt and who need intervention. These people do not have a voice. I wish that I could agree with the right reverend Prelate that the Minister should listen to the claimants, but the claimants are not being heard. The Minister smiles, somewhat surprisingly, when I say that, but if they were being heard, we would not be having this debate now.

The problems are not imagined. It is almost like a parallel universe where the Government reside in one country and the rest of us reside in another. Is what we have heard today imagined? No, it is not, but do not take my word for it—let me use the words of others. I raised the negative consequences of universal credit in a debate in your Lordships’ House on housing and affordability. I was surprised by the range of concerns that I received from organisations prior to this debate: Crisis, the NUS, the LGA, Scope, disability groups and many others including, yesterday, the Residential Landlords Association, which says that it is,

“concerned about the impact that Universal Credit is having on private sector tenants …Such a situation is not sustainable for either tenants or landlords. Many landlords are becoming concerned about renting to tenants on Universal Credit as a result”.

It calls for the waiting times to apply for and receive universal credit to be addressed swiftly and asks that,

“claimants … be trusted to make the right decisions for themselves by giving them the ability to choose, where they want to, to have the housing element of UC paid directly to the landlord”.

Crisis is calling for the Government to provide £31 million for help-to-rent projects, which will help to improve the functionality of universal credit. The Joseph Rowntree Foundation says that:

“Universal Credit … has the potential to dramatically improve the welfare system”,

but then goes on to say that it is calling for three priority actions:

“Reduce the 6-week wait at the beginning of a Universal Credit claim by getting rid of 7 waiting days and giving claimants choice over payment frequency. Enable people to keep more of what they earn under Universal Credit by restoring … Work Allowances. Lift the freeze on working age benefits so incomes keep up with prices”.

Is that imagined? No, it is not. What about Centrepoint, Homeless Link, Shelter and St Mungo’s? They say:

“As four leading homelessness and housing charities, we support the principles behind Universal Credit. Yet we are concerned that Universal Credit in its current form is not working for people who have experienced, or are at risk of, homelessness”.

Yes, it is painful to listen to and perhaps in my delivery it is even more painful for the Minister to hear, but I make no excuses for describing the despair that people are facing day in, day out. It may come as a surprise to some Members that people who are deep in debt or homeless do not sit down and worry about what they read in Hansard. It is a million miles away from the lives they have to lead.

These homelessness charities recommend that:

“A money management package, including exemption from the seven day waiting period, should be developed for individuals identified as homeless or at risk of homelessness at the beginning of a Universal Credit claim”.

Their second recommendation is that:

“All individuals identified as homeless should be granted Alternative Payment Arrangements … as standard, from the beginning of their claim”.

I turn to the casework of my constituency MP, Jim Fitzpatrick—I do not receive such casework. A person was referred for help by the carers’ centre but no assistance was given. He returned to the carers’ centre, which claimed for him, but he will require long-term support to manage his claim. Another person, with poor literacy and no computer, had three separate visits but lacked support and help. For another working claimant, the payments were varied and wrong for three months before being corrected. One claimant had mental health problems that were not being taken into account by the work coach. And there are many others. These are the cases that we know of—what of the others who have slipped through the net, have faced eviction and are now homeless on the streets and dispossessed?

It takes courage and leadership to change one’s mind. I urge the Government to show such courage and leadership.

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My Lords, it is a great pleasure to follow my noble friend Lord Cashman. Like everybody else who has spoken, I congratulate my noble friend Lady Hollis on securing this debate and on the typically forensic manner in which she introduced it. Like many people, I have supported the stated aims of universal credit—to simplify the benefit system and to strengthen incentives to work. There were hopes, too, that it would build on a social security safety net leading to lifting 350,000 children and 600,000 adults out of poverty. Its inheritance was that child poverty was at a 13-year low and there was cross-party support for further poverty reduction.

But we are a long way from all that today, and from the confidence of the coalition Government’s November 2010 White Paper. One of its paragraphs demonstrates the poor judgment involved in implementing such a major change, and why it has run into so many difficulties. Paragraph 12 of the executive summary states that universal credit,

“would involve an IT development of moderate scale, which the Department for Work and Pensions and its suppliers are confident of handling within budget and timescale”.

So much for confidence, with the programme having to be pushed back several times and a complete reset in 2013. But this has still not avoided the problems faced today, which is why we call for a pause in ramping up the full service rollout, so that some of its problems can be sorted out.

Many of the problems have been well aired this morning, and we have received a plethora of briefings for this debate, which are remarkably consistent. Some of the problems are design issues, some are problems with the administration of UC, and some are made worse by the fact that the changes are being implemented in a period of severe austerity. We heard some of the data from my noble friend Lord Livermore.

It is worth reflecting on the scale of this austerity. Let us remind ourselves that, as the CPAG analysis sets out, cuts to social security during the period of the coalition Government amounted to some £14.5 billion a year. The subsequent squeeze under the Conservative Government added further cuts of £13 billion. The OBR has confirmed that universal credit is now less generous than the tax credit and benefit system it replaces. Rather than reduce child poverty, the cuts will mean 1 million more children in poverty compared with the original design. The cuts will also reduce the rewards from work.

We will doubtless hear from the Minister that these cuts are countered by measures to boost family incomes, such as the increase in the personal allowance, the national living wage and childcare support. However, as the IFS points out, not only are these gains much smaller than the loss in benefits but they do not in general accrue to poorer households. Perhaps the Minister will confirm that.

On matters of design, much attention has rightly been focused on the monthly payment cycle and the initial six-week wait for payment. But there are other issues, perhaps not of such wide application, which have already been aired. Is the Minister aware of the difficulties arising from the late payment of final earnings, which can deny the initial period of a universal credit claim? Does she consider that the treatment of mixed-age couples who are denied pension credit is fair, and if so, why? What justification can she offer for the scrapping of the severe disability premium?

We know that the payment of housing costs through the housing element of universal credit is a significant problem, and the build-up of debt is hurting landlords and tenants alike. It is known that more landlords are joining those who are already reluctant to accommodate tenants on universal credit. The National Housing Federation includes in its representations concerns over mistakes being made by the system, and the lack of information, particularly when transitioning from legacy benefits. We have enough of a housing crisis, without adding to it by procedures which put tenants at risk of eviction and homelessness.

We should acknowledge that the Government have been generous with their time in holding briefings. But there is a total mismatch between what Ministers seem to hear and the furore raging in the country about how universal credit is being applied. It is to be hoped that today’s debate will reach those who currently have the power to change this.

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My Lords, I too congratulate the noble Baroness, Lady Hollis, on securing this debate at such a timely juncture, and on introducing it with her customary authority. Everybody says that universal credit is a good idea in theory. If successfully implemented as originally conceived, it would bring six existing benefits together in a single system and ensure that work always paid. But in practice it has been dogged by nothing but problems. Implementation has been subject to severe delays, and it is now running some five years behind. It has been beset by IT problems, cost overruns and write-offs, and the Treasury has substantially eroded the value of the new benefit by cutting costs, in particular by raising the taper rate—the rate at which earnings are clawed back—from 55p to 65p in the pound; it was only slightly reduced, to 63p, in last year’s Autumn Statement. As is plain to see, rollout, and the time people have to wait before payment, is giving rise to major problems.

I want to talk about the impact on disabled people. I suspect I shall be making a good many of the points that the noble Lord, Lord Shinkwin, did not have time to make, so if he has discussions later with the Minister, I wonder whether I might possibly join those discussions.

To begin with, a number of design and implementation faults have caused problems for disabled people in accessing payments. There are concerns that processes and systems are inaccessible. Universal credit is normally claimed online, and Citizens Advice has found that people are struggling with the application process, including difficulties with the online system. The online application process must be made accessible, including the provision of information that is easy to understand. Disabled people should also be given the opportunity to make their claim in person and have access to appropriate support.

As for the financial impact, Citizens Advice estimates that 68% of households claiming universal credit will have an adult with a disability or long-term health condition. In her 2012 report Holes in the Safety Net, the noble Baroness, Lady Grey-Thompson, found that 450,000 disabled people would be worse off under universal credit. Certain groups would be particularly affected: 100,000 disabled children would lose up to £28 a week, and 230,000 severely disabled people who do not have another adult to assist them could lose between £28 and £58 a week. Up to 116,000 disabled people who work could be at risk of losing £40 a week.

The reality was made clear by a disability activist who wrote to me saying:

“One aspect of the universal credit system which to date no one has mentioned is the fact that when making a new claim for universal credit, severely disabled people lose £78.35 a week. This is due to the fact that two of the three disability premiums that were available under employment and support allowance are no longer available under universal credit. Under ESA there were three disability premiums. A basic disability premium of £32.55 a week is still available, but a severe disability premium, currently £62.45 a week payable to people receiving the mid or high-care component of DLA or PIP, and an enhanced disability premium, currently £15.90 a week payable to those in receipt of the highest rate of care component, are no longer available.”

She cited the case of a disabled man with severe mental health problems who stood to lose £77.75 a week. The stress occasioned by this potential reduction in his income, together with the hassle of the application process, had led him to make two attempts on his life.

The Welfare Reform and Work Act 2016 also saw a £30 a week cut in employment and support allowance for those in the work-related activity group. That was a particularly controversial cut. Despite much urging from the disability community, there is no sign of it being reversed. This cut is mirrored in universal credit by the removal of the limited capability for work component, also worth £30 a week. In many cases, this is likely to mean that for those disabled people in low-paid jobs, work will no longer pay, while for those not in work, it will be increasingly difficult to make ends meet.

The Disability Benefits Consortium, which represents 80 disability charities, is urging the Government to halt the rollout of universal credit for any further disabled claimants and urgently engage with disability organisations and disabled people to see how the dire consequences of universal credit for disabled people can be ameliorated. I earnestly beg the Government to heed its call.

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My Lords, there is, as exemplified by today’s debate, widespread concern about the way universal credit has developed. I shall outline some of the problems that have emerged in Newcastle, as reported by the city council, of which I am a member, and the citizens advice bureaux.

The system has been implemented locally in stages since May 2016 and the process will be complete by May 2019. There are now in Newcastle 10,826 people on universal credit, and by 2022 working-age benefits will be cut by £123 million. Already there have been serious problems. The controversial six-week wait—this has been referred to many times today—before the first payment is made has led the council to make 327 crisis support scheme awards, totalling just over £29,000, to people awaiting payment or receiving an incorrect amount. As if that was not bad enough, the DWP has been found to be deducting fines from payments, often by as much as 40%, without considering the individual circumstances and hardship that might ensue.

There are also problems around the impact on council tax reduction. Hitherto, housing benefit and council tax reduction were applied for at the same time. Now only those universal credit claimants who indicate an intention to the DWP to claim separately for council tax reduction benefit will have information about their entitlement to universal credit sent to the council. The council has processed 3,723 claims for council tax reduction, which is many fewer than anticipated, and is working with Jobcentre Plus and Your Homes Newcastle to maximise the number of universal credit claimants claiming council tax benefits at the earliest stage. What will the Government do to facilitate this process?

There are particular problems for those residents for whom English is not a first language. Library staff, with the aid of interpreters, have helped over 100 households to obtain their entitlement, but there must be concern about those who have not sought that aid. Currently, Your Homes Newcastle has rent arrears attributable solely to universal credit of nearly £1.4 million.

There are some sad cases among those struggling with the new system. There is the single 25 year-old woman who lost her job, had no income for five weeks and faces eviction from her private rented property. Another woman, suffering from depression and with a baby daughter not yet a year old, was left entirely without income and had to be provided with food and supplies by the council. A 61 year-old man, unable to read or write, was booked into an assisted digital support session at the city library by Jobcentre Plus. The library staff managed to help him through the application, but how is he going to manage his email account in the future?

Newcastle’s citizens advice bureau has helped 357 people since July, and, in the last two years, 11.2% of all households on universal credit in the city. It relates some staggering statistics: 30% of the people it has helped had made 10 or more calls to the helpline and 40% were unaware of the possibility of obtaining an advance payment while waiting the six or seven weeks before the first payment was made. Even the likely reduction to a four-week delay is still going to cause problems.

There are problems with free school meals because of delays in proving the universal credit claim is successful until two days before the first payment. Any money paid for dinners before then is not reimbursed, with parents having to have recourse to the food bank.

There are also problems with people being persuaded to move from jobseeker’s allowance to universal credit. One man lost £100 a month in housing benefit which had included a disabled living allowance and the disability and severe disability premium which came with jobseeker’s allowance, but not with universal credit.

One woman was transferred to universal credit from jobseeker’s allowance where she had a disability and severe disability payment of £728 a month and lost £410 a month, so is left with some £317 a month in total and could lose her home because she cannot keep up her mortgage payments.

Whatever the good intentions, it is apparent that this transformation of welfare provision has been little short of a disaster for far too many people. It is taking much longer than estimated to roll out, leaves too many people struggling to make meagre ends meet and adds to the huge pressure on local councils and advice centres struggling to help those people navigate the uncharted waters of social security reform. It is not so much universal credit as near universal discredit.

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My Lords, I too congratulate the noble Baroness, Lady Hollis, on securing this debate, which provides an opportunity to remind ourselves how universal credit can help its recipients. I echo some of the concerns that have been raised today.

I stress that universal credit has definitely created clear incentives to work by removing the poverty traps at all levels which in the past often made paid work uneconomic. Indeed, the existence of universal credit probably helped mitigate the unemployment rise in the wake of the last recession so that the numbers of unemployed were below all known forecasts. As others have remarked, we should remind ourselves of those years, and of what universal credit is here to replace. Before universal credit, we had a complex system that failed the very people who needed the support and opportunity the most—an incredibly complicated administrative system, which, as my noble friend Lord Farmer said, often trapped people in a cycle of vulnerability, dependency, immobility and poverty.

Since the introduction of universal credit, we have a system where work actually pays at all levels, whether part-time or full-time, compared with not working, and not just financially. I am a passionate believer in the pride and dignity that work provides, how it gives a sense of self-worth and a feeling of belonging, and how even an initially less well-paid job or a part-time job can lead to promotion or help enhance a CV, whereas a long period of unemployment blights it.

Despite hearing many examples today of individual cases where UC has caused real problems, overall since universal credit was brought in, more people are able to get work than under the previous benefit system. We know that universal credit claimants are four percentage points more likely to be in work within six months compared with people on the previous jobseeker’s allowance. Like my noble friend Lord Shinkwin, I stress that above all the system must be sustainable.

Figures show that the number of children living in workless households is at the lowest level since records began and unemployment is at the lowest level since 1975, as my noble friend Lady O’Cathain said. Furthermore, by the end of the rollout, it is estimated that universal credit will boost employment by 250,000. Behind all those statistics are hard-working people making this happen and universal credit supports them in that.

Like others, however, I wish to raise concerns with my noble friend the Minister. I acknowledge that while being paid monthly possibly helps the recipient to prepare for the monthly salary that is most common in work, and becoming more so—I see the logic of that—I am aware that people who receive universal credit are often out of work and have little or no savings to fall back on. Like many noble Lords, I would like my noble friend to explain how the Government currently mitigate the slightly longer time it takes for a claimant to receive universal credit, and whether there are any plans to improve the situation if we see more claimants experience real cash-flow problems. Furthermore, I understand that, at the time they apply, some claimants who find themselves entering universal credit will have existing rent arrears, debts and possibly payday loans. Does the Minister agree that we need to do more on personal financial education in the UK—at all levels, including schools? Are new universal credit claimants with pre-existing debts either referred to Citizens’ Advice automatically or given the information they need to get their debts down? Will they get assistance in accessing products that can help them to do this, such as IVAs or other programmes for managing debt?

While it is easy to categorise the unemployment level as a number, I try never to forget that behind every claimant count there is a human being wanting to work—to provide a better life for themselves and possibly their family. There is a human being feeling the frustration of not seeing job vacancies that fit their skills, financial needs or family commitments, and probably enduring endless interviews and the bureaucracy of repeated claims.

After years of tinkering with a failing system with so many layers and complexities, replacing it with universal credit provides the best chance to help that person back into the world of work. Therefore, despite the real issues raised—I hope the Minister can address some of them—I believe it provides the best chance of that person leading a self-fulfilled and purposeful life.

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My Lords, on the face of it, universal credit seems a good idea. We were told that it would simplify the system; it would make work pay and, as a result, recipients would enjoy higher living standards. Why is it then that an astonishing mass of experts have provided evidence that has led them to urge a temporary halt to the rollout of the system until it can be more effectively and efficiently put in place?

Why, we may ask, was it necessary for the Joseph Rowntree trust to point out that the majority of people experiencing poverty already live in working households? In 2013, claimants in Warrington were among the first to experience universal credit. Their biggest social landlord quickly found that the haphazard payments system did not fall in with its accounting procedures and processes—92% of its tenants using the new system went into rent arrears.

Some problems—such as the six-week wait for benefit—were known about four years ago. The majority of in-work claimants get paid weekly and those on zero-hours contracts and in other forms of the gig economy have no certainty over when they will be paid. Not surprisingly, few have money in the bank to finance delays. We are entitled to ask, was it the Government, a Minister, or the DWP who thought claimants could wait six weeks or longer before receiving any money? Did they think unfriendly landlords would wait six weeks for their rent?

Who would doubt that the six-week wait was incorporated purely as a saving device? It is know that, from the outset, universal credit has been dogged with problems—processing errors, computers malfunctioning and poor management. The Guardian reported irregular payments to claimants, claims being closed without explanation, difficulties in contacting benefit officials, and lengthy waits for errors to be corrected. The CAB found that local jobcentres had no reliable access to the system to sort out problems. Local authority staff brought into help were unable to reach anyone with responsibility for universal credit, or who had the will or, indeed, the authority to investigate.

Do the Government really think a rollout to the whole country will improve the system, which is unable to cope with existing numbers? It will be like trying to run a marathon backwards. A variety of individuals and organisations predicted, and indeed warned, that the rollout would result in chaos. To date, the evidence shows that what we have is not just chaos but, for many people, social disaster.

The Peabody Trust estimates that the mandatory six-week wait for a first payment will put more than 23,000 low-income families at risk of destitution. The Trussell Trust predicts that in the run-up to Christmas, when the number of food banks in areas of full universal credit will triple, there will be a massive increase in demand for its services. Already, it has seen a 30% average increase in use among universal credit claimants. New analysis by the Child Poverty Action Group and the Institute for Public Policy Research predicts that the cuts to benefits under universal credit will put 1 million children into poverty, while the Institute for Fiscal Studies states that the number of children living in poverty will soar to a record 5.2 million over the next five years—and so the problem increases. Organisation after organisation questions the sense of expanding the system. Shelter warns of a massive increase in homelessness. Last month, Frank Field MP, chair of the House of Commons Work and Pensions Committee, accused the Government of withholding bad news. I do not question their motives—if I had such a bad story to tell, I would keep it to myself.

With the crisis getting worse by the day, common sense demands a pause to sort out the administration and the structural problems of universal credit, otherwise the cost to the next generation will be extreme poverty and futures lost forever. In summary, the verdict across the country on this policy is simple: good intention, poor execution.

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My Lords, I declare my interests as chair of Peabody and president of the Local Government Association. My other interests are as listed in the register.

Universal credit stands as an almost perfect example of what the French call “the politics of the stiff neck”—a stubborn, haughty refusal to change one’s mind in the face of all the evidence to the contrary. The consequence of this stubbornness is to cause quite unnecessary misery for a large number of very vulnerable people.

I hope that today’s debate, which I congratulate the noble Baroness, Lady Hollis, on organising, will go some way to persuading the Government to change their minds. There can be few—there are none in this Chamber—who disagree with the aims of universal credit: to simplify the benefits system and make work pay. The key problem lies not in the aims but the execution.

It is a complex project that has to take account of a lot of different individual circumstances. If you are really going to make work pay, there is a cost, which goes against the relentless reduction in welfare spending. No one expected this project to be easy. Indeed, when it ran into trouble during the coalition Government, there were big issues to resolve. They were largely internal problems, however, and the pain, such as it was, was confined to Ministers and officials responsible for that implementation. The crucial difference between then and the current crisis is that the pain now will be felt by thousands of claimants and that number will grow dramatically to some 7 million people as the project is rolled out.

If anybody doubts the malign impact that universal credit in its current form is having, I would refer them to the Smith Institute Report Safe as Houses: The impact of Universal Credit on Tenants and Their Rent Payment Behaviour, commissioned by the London Boroughs of Croydon and Southwark, and Peabody. Seven hundred and seventy-five rent payment accounts of tenants starting universal credit in August and October 2016 were analysed and compared with 249 tenants starting on housing benefits at the same time—a control sample. In addition, 36 in-depth interviews and four focus groups were held. The results are absolutely clear cut: growing rent arrears, with high arrears at the start that are never fully recovered; delayed payments and consequential financial hardship; a one-size-fits-all approach that does not take account of the individual circumstances of tenants; and severe impacts on those tenants who are the most vulnerable. The statistics tell a story but the individual cases, as we have heard today, are heart-rending. What is particularly sad is that the feelings claimants now have about universal credit—which was intended to help them—are generally, if not universally, negative.

Claimants really do not want to be in debt. They do not want to rely on friends or, even worse, on loan sharks. Our research at Peabody has calculated that without change, 41,000 children in the UK are at risk of being in penniless homes over this Christmas due to the wait for universal credit. I think Members on all sides of the House will see this as utterly intolerable.

What can be done? Some good practical steps can be taken now: remove the seven-day wait at the start of a new claim; reduce the waiting period to two weeks, as with housing benefit; offer everyone alternative payment arrangements—let the claimant make the decision on whether they want their rent paid direct, not have the state decide what is good for them; inform everyone moving on to universal credit that advance payments arrangements exist; and put in place a comprehensive support package to help with the application process. These measures will not deal with all the deep issues with universal credit at the moment, but they would be an incredibly good start. I add that the Government, if they are serious, should also establish an independent body to review the progress and impact of universal credit at each stage of the rollout. I say to Ministers that these are not big asks; they do not threaten the future of the project. Why on earth do the Government not agree them now?

Good government is not easy. We make mistakes; we learn from them. But to press on with this project without amendment when there is such clear evidence of the distress and hardship it will cause is not just bad government—it is cruel. I look forward to the Minister’s response.

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My Lords, the situation is becoming critical. More and more questions are being asked of the Minister but she has less and less time in which to answer them. I urge noble Lords to make sure that their speeches end by the time the clock hits five minutes.

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My Lords, I too was stopped in the corridor by my noble friend Lady Hollis, who urged me to take part in this debate. I will not go into any detail about our conversation, but she could teach my noble friend Lord McAvoy—a former Deputy Chief Whip in the other House—a thing or two about effective persuasion.

In July 2012, in a report, Disability and Universal Credit, the noble Baroness, Lady Grey-Thompson, wrote:

“No group will be more affected than disabled people”.

She was right. It is estimated that half a million disabled people will be financially worse off through the removal of the disability premiums, as well as cuts in child disability payments affecting 100,000 children. The Government say that support will be provided through personal independence payments and social care from local councils, and that “transitional protection” will be available when disabled people are moved from ESA to universal credit. But cash-strapped local authorities have no obligation to provide this support. Can the Minister confirm that this is the case?

The removal of the severe disability premium and the £30 cuts to the limited capability for work component, as well as cuts to working allowances, will hit disabled people both in and out of work. There have been a number of problems, causing difficulties in accessing the system. I raised this in a series of questions in November 2012. I wanted to know what assistance would be available to people receiving UC if their payments were wrong as a result of their employer failing to notify HMRC of their pay and tax details. I was told:

“If earnings are not reported … claimants will be requested to declare their earnings … through the universal credit interface”.

I asked how the UC interface would operate and was told:

“The UC ... will allow claimants to provide ... details via a self-reporting tool”.

I then asked what a self-reporting tool was and was told that it was the telephone. If it took me three questions to get that answer, what hope does anybody else have who is seeking to access information on how to get into this system? How else will claimants be able to get information? The online application process must be made more accessible, including the provision of easy-to-understand information. Does the Minister agree? Disabled people should be given the opportunity to make claims in person and should have access to appropriate support. Does the Minister agree with that?

The Government have sought to reassure people with the promise of work coaches who be responsible for guiding the claims of disabled people and advising them on returns to work. We are told they will work up the “claimant commitment”, but if people fail to comply they face sanctions. So far the Disability Benefits Consortium has seen no evidence that universal credit processes, systems and work coaches will be able to appropriately assess and support disabled people and those with complex health conditions. Will the Minister agree to look at this urgently?

The Secretary of State for Work and Pensions, Mr David Gauke, said:

“The fundamental purpose of universal credit is to assist people into work”.—[Official Report, Commons, 18/10/17; col. 866.]

But if you have a disability you will be among the millions of people without work and with little prospect of work. Despite the Government pledging to get 1 million more disabled people into work, the disability employment gap remains frozen. Just 30% of people with a disability are working compared with 80% of non-disabled people. In the 2015 election manifesto the Conservatives said that,

“we will aim to halve the disability employment gap”.

Was this meant to be by the end of Parliament? Can the Minister enlighten us on that pledge? The Government now appear to be talking of a 10-year strategy. Is that now the policy? We need clarity, because at the current rate of providing opportunities for disabled people to get into work it will take half a century to cut the numbers in half.

I turn briefly to the issue of people with autism. The disability employment gap is wide but the autism employment gap is even wider. The National Autistic Society, of which I am a vice-president, believes that only 16% of people on the autism spectrum are in full-time work. If you add the numbers of autistic people in part-time work, you get an overall autism employment rate of 32%. This is despite 75% of autistic people wanting to work. The National Autistic Society is concerned that work coaches will not have the knowledge or understanding of autism and that they will be unable to recognise the potential impact they may have on a person’s ability to work. The barriers an autistic person faces in finding and keeping jobs are often different from those with other disabilities, and work coaches will need a thorough knowledge and understanding of how their advice can impact upon people with autism. To tackle the autism employment gap, the National Autistic Society wants all work coaches fully trained and the Government to produce an autism-specific employment pathway with end-to-end specialist support. I hope that the Minister will be prepared to look at this.

Universal credit is a good idea. It was meant to help people into work. In fact, it is helping people into poverty.

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My Lords, I thank the noble Baroness, Lady Hollis, who has made sure that this Motion is debated here, for it appears to be one of the most contentious government programmes being rolled out at the moment and a real opposition attack line. I must admit that I am surprised that it is actually being proposed. When my friend the current Member for Chingford presented the initial White Paper in the other place, I thought it would be too difficult for any Government, purely on an administrative level. It is testament to the indefatigability and competence of the current Secretary of State and his predecessors that we are finally moving to a full rollout.

I state at the outset that I am in favour of the principles of universal credit. To simplify benefits into a consolidated payment makes sense on every level. Lower processing costs and greater ease of use create gains for the recipient and the administrator, as well as making it easier for new entrants to avoid paperwork. Some take the general view that monthly payment is wrong because it means that funds can be spent more quickly. Let me be clear: I am a Conservative. I believe in personal responsibility and sound fiscal management. In the workplace, one is expected to manage spending such that it tallies with the inflow of wages. If we have a benefits system that does not prepare people for the workplace, what is the point? It is precisely because the way people are paid requires management skills that we must structure our benefits system to mirror it. We teach our young people what they need to manoeuvre in the modern economy in school, and it makes sense that the various other arms of the British state ought to as well.

I will keep my criticism of the scheme brief, mainly because one of my key concerns has already been addressed. Forcing claimants to pay to call up, especially with the complexities of a new system, was mean-spirited and unfair. I am glad this has been reversed. My other criticism—and I worry—is that the relatively simple cases that the scheme currently deals with can create complacency. Single people with few complications are the easiest cases, so some of the evident success of the scheme could fall away as more people are brought on. Let no illusions be entertained: there will be more bumps in the road ahead.

There is one area I would like the Government to rethink. I was concerned to read about the data collected from Croydon, Hounslow and Southwark in the Work and Pensions Select Committee report last month. The data indicates that 2,500 tenants in London claiming UC stand at risk of eviction from their homes as a result. I do not think that this is entirely government failure. As the National Federation of ALMOs report made clear, three-quarters of claimants were already struggling. However, we ought to make every exertion to not exacerbate that issue, especially as the taper rate is already being lowered and people are receiving smaller cheques.

I was pleased to read that the Secretary of State was open minded to increasing the share of advance payments to more than 50% of the estimated first UC payment. I would like more flexibility to let that rate be raised or banded for different kinds of claimants. Will my noble friend consider this policy in light of the data that we received last month?

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My Lords, this is an extraordinarily timely debate in terms of the rollout of universal credit and I congratulate my noble friend Lady Hollis on securing it. Her powerful opening speech was a catalogue of good policies eroded by Treasury pressure, now creating misery for thousands.

I declare an interest as chair of the National Housing Federation representing housing associations. Many thousands of their tenants are eligible for universal credit. I have seen at first hand the awful impact on families and individuals of both the six-week wait and the poor administration of the scheme. The federation I chair has worked with the department to design a portal that enables landlords to see the status of tenants in the system and avoid moving to eviction.

I want to focus on some of the immediate problems that housing associations have encountered. It is clear that the six-week waiting time for the first payment is not working. It is causing unnecessary hardship for low-income families who struggle to make ends meet while waiting for their very first payment. I know that the Government have increased the availability of advance payments, but these are loans that must be paid back. This leaves people with already very limited funds with another financial burden to manage while they try to keep a roof over their head and put food on the table.

The six-week wait is not fundamental to the operation of universal credit. It has been built into the system by government and—yes—by pressure from the Treasury. Reducing this period to two weeks or to a very maximum of four weeks would save even more people from falling into unnecessary financial hardship and building up rent arrears. Will the Minister acknowledge the evidence and deal with this as a matter of urgency?

Then there is the way universal credit is being paid. Claimants are paid on a monthly basis in arrears. The Government argue that this is designed to mirror the world of work, smoothing the transition into paid employment. The Resolution Foundation found that this was not realistic for many of those eligible for universal credit. Many other noble Lords have mentioned this, but 58% of new claimants moving on to universal credit after leaving a job were not paid monthly. They relied on weekly or fortnightly pay cheques. So the move means more juggling of costs, or borrowing money while they wait for their UC to arrive. We should have learned; the same problems arose when weekly cash payments were changed to monthly bank payments. The response then was phasing and it worked. Will the Minister consider that option before UC is rolled out any further?

I have one final point. As many noble Lords have highlighted, universal credit is a huge change for everyone involved. It should be no surprise that many people need help navigating and managing it. All sorts of problems need to be sorted out. But the department has not allowed implicit consent for sharing information with third parties in UC full service areas—except for MPs. This is a different system from live service and has hamstrung housing associations and agencies such as Citizens Advice as they try to help people manage their claims and sustain their tenancies.

In full service, housing associations now have to seek explicit consent from tenants to allow the Department for Work and Pensions to share more detailed information about a claim. This consent can last for the period of the assessment, or sometimes staff are asked to provide consent each time they contact the DWP on the tenant’s behalf. This is just not practical, especially in rural areas where support is often provided remotely. It leads to unnecessary delays in sorting out problems and, in the worst circumstances, can result in associations and tenants incurring legal costs because a problem with a claim cannot be sorted out in time. I urge the Minister to resolve this issue as soon as possible. I urge her to look again now at waiting times, payment cycle and the rules around consent.

There was widespread support for the principle and aims of universal credit. Speakers today on all sides of the House have shown that we do not yet have a system that meets those aims. As the rollout of universal credit speeds up, affecting more and more people, these issues will pose real challenges to the very people universal credit was set up to help. This is one of the biggest welfare changes in a generation. I do not believe that the Government want their legacy to be thousands of families pushed further into debt and hardship.

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My Lords, I thank the noble Baroness, Lady Hollis, for bringing this debate to the House at such a timely moment. I am delighted to have the opportunity to contribute on such an important matter. Due to time constraints I will restrict my remarks to the intended impact of universal credit on claimants and how it would be possible to ensure that universal credit was universally positive for claimants.

When the concept of universal credit was created, it was designed to address a welfare system—as we have heard—that disincentivised both work and progression in work, penalising those who worked more or less than, say, 16 hours per week, and that made the transition into work a complicated and illogical step to take. The vision therefore for universal credit was for a system that reversed those dynamics. Fundamentally, universal credit was designed to be a simpler system, combining, as we have heard, six separate benefits into a single payment, paid in arrears to mirror the world of work—a system that incentivises work and assists people as they move into and progress in work, and that makes work pay. Universal credit is designed to ensure that work is the logical choice.

It is a system that is proven to have a positive impact on claimants as they take and progress in work. Universal credit claimants invest more time looking for jobs—around 50% more than someone on jobseeker's allowance. Universal credit claimants move faster into work. Claimants who are unemployed are 4% more likely to be in work within the first six months of their claim than someone on jobseeker's allowance. Universal credit claimants work more hours, and they earn more. Universal credit claimants work, on average, 12 days more than JSA claimants in the first nine months of their claim.

It was for these reasons and with this vision that many on both sides of this House supported universal credit, and it is for these reasons that universal credit is having a positive impact on the lives of claimants. To repeat, as it is, universal credit is enabling claimants to move into work faster, earn more and progress further. These are the positive impacts of universal credit.

However, major reforms are never undertaken in a vacuum and, as we know, universal credit was introduced at a time of austerity. It was also launched with a “test and learn” approach at its heart and at a pace where it was possible to continually make adjustments to ensure that its original intent was delivered. It is for this reason that, as the Minister keeps her vigilant eye on delivery, I ask that she considers the following matters.

First, the fact that universal credit is paid in arrears is a feature of the legacy system. What is not a feature of the legacy system is the waiting period before someone is eligible to claim universal credit, which has become known as “waiting days”. This is not a design feature of universal credit, and should be separated in concept from it. In terms of claimant experience, I recommend that Her Majesty’s Government use each and every Budget to eliminate it completely. I do not think it should just be reduced; I think it should be abolished.

Secondly, I encourage the Government to use this Budget and each spending review to continue investing in the work allowances and taper in the same way as they restored the investment in tax credits, as it is the best way to support those who are just about managing.

Lastly, once these issues are addressed, there is one other item that would benefit the user experience of universal credit. With regard to childcare, if you are on a higher income outside universal credit, you can claim the tax-free childcare offer for as many children as you have. That is not the case for universal credit claimants. An investment of around £50 million could change that.

The Prime Minister has reiterated her commitment to both mental health and skills development, and I hope that this is reflected in a strong and continued commitment to universal support, extended beyond financial and digital inclusion to include family, mental health and skills support. I thank the Minister for ensuring that universal credit can continue to support claimants to earn more, move into work faster and progress in work, and I ask her to ensure that as she turns his mind towards the Budget—I understand that she cannot say anything now—under her department’s “test and learn” approach the issue of waiting days at least will be addressed.

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My Lords, universal credit does not fit the needs of the self-employed. It adds to complexity of their lives and acts as a disincentive to genuine self-employment. Because of the gulf between the DWP and HMRC, the self-employed have to cope with different systems, whether cash-based or accrual-based, whether pension contributions can or cannot be offset, and whether reporting is monthly, quarterly or annually. Even within HMRC, you will get a different answer depending on whether it is about tax or tax credit.

The Government have adopted a broad-brush approach and devised a system that discriminates against those doing the right thing. The Government’s concern about so-called hobby traders is skewing the whole system; they would be better dealt with under anti-abuse processes. If someone is designated as gainfully self-employed, they will already have satisfied certain criteria, and it is unlikely that they would be hobby traders. The self-employed are discriminated against if they earn the same as an employed person but have fluctuating earnings. They include farmers and actors, among a whole host of different groups. They can lose up to £2,600 a year because of the clunky system known as the minimum income floor.

The minimum income floor applies only to those designated as gainfully self-employed. They are subject to monthly assessments, which in themselves are an unnecessary burden. In any month in which a self-employed claimant’s profits fall below the minimum income floor, their universal credit award is assessed as if they had profits at least equal to the MIF. The discrimination kicks in when there are fluctuating earnings. If a claimant then feels that their gainfully self-employed status is not worth it because of the loss of significant financial support, they might push for reclassification as not being gainfully self-employed, accepting that work conditionality would apply. This is an unclear area as it is not dealt with in the legislation, although the noble Lord, Lord Freud, said that people had a choice. It is not much of a choice, by the way.

The Low Incomes Tax Reform Group of the Chartered Institute of Taxation has suggested a number of measures that would help to mitigate the worst impacts of the current system, and I am grateful to Robin Williamson, Victoria Todd and Claire Thackaberry for their briefing and excellent report, which was published last month, entitled Self-employed Claimants of Universal Credit—Lifting the Burdens. Of course I accept that people should not be allowed to manipulate the system, be it those mentioned in the Paradise papers or universal benefit claimants, and failing small businesses should not be supported by the taxpayer.

Time does not allow me to cover all the suggested changes proposed by the LITRG but I have selected key points. The first is specially trained jobcentre staff so that all new self-employed claimants would have an interview and be given ongoing support. We are not criticising jobcentre staff; we are saying that they are drowning. Secondly, the start-up period for the gainfully self-employed should be extended to two years so they can establish themselves and demonstrate their viability. Thirdly, claimants with fluctuating incomes or profits should be able to average them over a period greater than one month for universal credit; then, they would not suffer the cosh of the highly complex surplus earnings rules or be penalised by the minimum income floor regulations. Lastly, the calculation of gross profit should follow the HMRC cash accounting rules to align the systems, resulting in fewer errors as well as allowing the DWP to use tax returns to verify universal credit where necessary. There would need to be exceptions, of course, such as farmers, who have to use accruals accounting.

Self-employment has grown under this Government in spite of government policy. The Government now have the choice to treat the self-employed equally and fairly.

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My Lords, I add my congratulations to the noble Baroness, Lady Hollis. No one has done more in this important field of public policy over the years than she has. At the same time as we are discussing this important subject in the House of Lords, the House of Commons is discussing exactly the same topic. If ever there was any doubt about the importance of the subject, the conjunction of these two debates today should have significance for the Minister.

I will do a deal with the Minister: I will ditch what I was going to say, because I concur with so many of the points that have been made, as they are sensible. In return, if I give her a little more time to reply, I ask her to help me to understand three questions. The first was asked by the noble Baroness, Lady Hollis, who was right about the broken promises. I certainly feel cheated, as does she. She and I spent a lot of time working together in the exceptional Committee stage of the Welfare Reform Act 2012. We have come a long way now. We have come even further from dynamic benefits, which I signed up to; I signed up to test and learn, universal service delivered locally and in-flight corrections.

It was understood that we were going to put in a generous floor that did not just deal with work. The problem in this debate is that colleagues on the Conservative side of the House are pursuing—almost exclusively, if I can put it so pejoratively—the importance of work. That is right, but more than 1 million people who are going to move on to universal credit will never be asked to look for work, and we have to cater for them too.

The noble Baroness, Lady Hollis, and I started back in David Donnison’s day with supplementary benefit. That was a safety net, as the noble Lord, Lord McKenzie, mentioned. He made an important point because what we are missing here is the universal safety net that will need to be applied before people can even contemplate approaching the labour market. If this benefit were called “universal job search”, it would be perfect and I would support it 100%, as long as it were in place with a safety net underneath it.

I have three requests for the Minister. First, it would help me enormously if she could make a commitment—not a pledge or a manifesto commitment—saying that the Government intend, in the fullness of time, when resources allow, to put back some of the things mentioned by the noble Baroness, Lady Stroud, and the noble Lord, Lord Kerslake. If she said that that was the Government’s ambition, it would go some way toward dealing with an important broken promise.

Secondly, there really needs to be some practical change. Next week is a key moment. We do Budgets now only once a year, rather than once every six months. Therefore, if we do not get the resources we need—I would sign up to the package proposed by the noble Lord, Lord Kerslake, and I also like the idea of the fortnightly grant, which would get over some of the short-term, immediate problems staring us in the face—the whole thing could be prejudiced. There is a danger that this becomes so toxic that we will not want anything to do with universal credit. This is a very important long-term policy for the country, so next week’s Budget is essential. If we miss that, we will not get another shot at this until a year’s time, and that will be too late.

Thirdly, I urge the Minister to go back to the Treasury—we understand her position: we are not stupid—and stress that if something serious is not done or some serious intentions are not made clear, we are in danger of risking future collapse in public confidence in this very important policy. That would not be in the interests of anyone: not the United Kingdom, not low-income families and not even those who are comfortable and have found their way early into the labour market. There is a lot at stake here. It has been a very important debate and I hope the Minister gets a chance to respond to it in good time.

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My Lords, this has indeed been a powerful debate. I am indebted to my noble friend Lady Hollis for opening it with her characteristic combination of passion and mastery of detail. I am also grateful for the contributions of all noble Lords, who, between them, have told the story of universal credit, from the original dream, the plans, the delays and the stumbles, to the reality of the gap between the dream and what now is.

On 13 September 2011, the noble Lord, Lord Freud, stood at that Dispatch Box for the Second Reading of the Welfare Reform Bill. He described universal credit as,

“the most radical reform of the welfare system since its invention”.

He told us:

“It will be simple to understand and access”.—[Official Report, 13/9/11; cols. 628-9.]

He also assured us that everyone would be on it by 2017.

He described a seamless system that would ease the passage into work, make people better off and ensure that work always paid. He claimed that UC could lift nearly 1 million people out of poverty. Those promises were the basis on which Parliament voted to adopt universal credit, so to ask whether the system meets those promises is not to play politics, it is to judge the Government by the standards that they set for themselves.

If any noble Lord opposite ordered a hire car and were expecting a Rolls-Royce, and what they got was a battered old Morris Minor with a flat tyre and a broken back window, I do not think that they would be very happy if the company said, “You don’t really want to go home. If you wanted to drive, you would just get in it and go”. We are merely asking that the Government deliver what they promised, and that is what is not happening.

It does not help to get into a political game of pretending that tax credits were all dreadful and universal credit is all perfect. I worked as a special adviser in the Treasury alongside my noble friend Lord Livermore. We were all trying to do the same thing: to make work pay, to lift people out of poverty and to have a system that worked for everybody. Let us try to work together to get this right.

The noble Baroness, Lady Stroud, described what universal credit was meant to do. Of course, in that conception, it was a much more generous system. It had a 55% taper; it had more support; it had full universal support; it was a very different creature. We have to work out what is happening now, but it has been subject to repeated cuts from the Treasury, a point made by many noble Lords, including my noble friend Lord Livermore in a very powerful speech, the right reverend Prelate the Bishop of Durham, the noble Lord, Lord Low, and many others. We have heard many noble Lords demolish the idea that universal credit, as it is now constructed, always makes work pay: it clearly does not, and we need to get to a place where it does. My noble friend Lady Hollis made that very clear.

I am also sorry to say that we do not yet know if it works to help people to move into work, because the only evidence is research done before the work allowances were cut, back in the days when most people on universal credit were young single people, not those with kids or disabilities. We just do not know; the jury is out.

As for supporting people into work, the idea is meant to be that the claimant and their work coach work together to produce a personalised claimant commitment. That was the original vision, but I am hearing too many complaints about the variable quality of work coaches. The Government’s own research shows that most claimants feel that they are given a one-size-fits-all demand that does not meet their circumstances.

Although the carrots have been taken away, my worry is that the sticks are still there and the Government will have to lean on them. We have heard concerns about inappropriate sanctions on universal credit claimants, a point also made by the Trussell Trust. The trust also flagged up the problems emerging with in-work conditionality. In this new system, getting a job is not enough: if you do not earn enough money in that job to get off universal credit completely, you can be pushed to get more hours, or a second job, or to ditch your secure job for a better paid job. That is not very easy if you have kids or caring responsibilities. The system has to work before those sticks are wielded at people, and I do not think that they should be wielded that way anyway.

My noble friend Lady Donaghy made a very powerful case about the problems facing self-employed claimants. If the key argument for universal credit is a response to changes in income in real time, how can it be right to penalise self-employed people who are, across a year, earning the amount of money that the Government require, simply because they have good and bad months? That is what happens in business, even if they are not in seasonal work. Why can you get penalised if your profits drop one month because you have to pay the insurance bill? That simply cannot work, and I hope that the Minister will address this point.

Is universal credit working to lift 1 million people out of poverty? Sadly, as many noble Lords have said, it is having precisely the opposite effect. That is not surprising when we see the level of cut in support that have been given, compared to the previous system. The CPAG shows that a lone parent earning £150 a week from working 18.5 hours would be £2,336 a year worse off than under the 2010 tax credit system. How is that progress? We have heard from the noble Baroness, Lady Meacher, the noble Lord, Lord Low, and my noble friend Lord Beecham about the problems for people with disabilities. The cuts in the severe disability premium and the challenges of using the system were well described by my noble friend Lord Touhig. I am very grateful to my noble friends Lady Armstrong and Lady Drake for highlighting the impact of the two-child policy on some kinship carers, despite the vote in this House to exempt them.

None of this will be offset by the tax cuts that get mentioned every now and again. As we have heard, they do not help the poorest. Even if the personal tax allowance were increased next week, somebody on £80,000 a year would get the whole benefit of that. A single mum working 35 hours a week during term time would not benefit from any of it, because she wouldn’t be earning enough.

The IFS used its gold-standard TAXBEN model to look at the impact of all of the fiscal changes that the Government have made. Its projections show that unless changes are made by 2021-22, 37% of our children will be living in relative poverty, the highest percentage since modern records began in 1961. For shame.

Is the system simple and easy to access? I need hardly go there, with all the stories that we have heard today. It clearly is not. I hope very much that the Government will address the long wait. I hope that Ministers will remember that, when the Bill was going through Parliament, noble Lords from all around the House pointed out that this would be a problem. That was in 2011, and I am sorry to say that almost every problem that has happened to universal credit was mentioned back then, during the passage of the Bill. The Government have had years to address this and they have failed to do so, so I hope very much that they are listening, but I am getting a little nervous, because now, in 2017, the problems are still here and are not yet being addressed.

The six-week wait clearly has to be addressed, but that is not a delay, it is a target. It is built into the system, and people simply cannot manage, as my noble friends have pointed out, without being support much earlier. I am worried about how the system will affect vulnerable people—a point made by my noble friend Lord Cashman and others. I worry, too, about the implicit consent rule. I am also worried about the need to do this online. An advisor told me about a man suffering from severe depression who cannot leave the house, has no computer or internet skills and cannot manage an online account. The DWP has not helped him at all. His sick notes are now rejected by the jobcentre because he has to enter them online.

It is not working. We have heard descriptions of chaos, failing systems and problems. This has to stop. The problems with housing, mentioned by the noble Lord, Lord Kerslake, my noble friend Lady Warwick and others should be enough to ensure that it does. My noble friend Lady Andrews described the problems in Wales and other parts of the country, as did the right reverend Prelate the Bishop of Durham. I worry that the Government have not realised how serious this is. I do not blame the noble Baroness, Lady Buscombe. She has been gracious to deal with and generous with briefings, but she inherited this mess and she simply has to help her department sort it out. I worry that the Government have been complacent about the scale of the problems, and I have not been encouraged by some of the contributions from those sitting behind the Minister today. Either the Government believe that the problems are not very serious or they have decided that they are collateral damage—a price worth paying. Either of those is mistaken; and the second is, frankly, unacceptable.

It is not too late. This system is in serious trouble. As the noble Lord, Lord Cormack, said in a very powerful and helpful speech, what happens here results in human misery, and we need to address it. I urge the Government to take a deep breath now and stop. As my noble friend Lord Cashman said, leadership is not about ploughing on regardless; it is about stopping, pausing, listening to every word said here today, reading 650 pages of evidence given to the Select Committee and getting the system right before pressing on. That is the very least that this country demands.

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My Lords, I thank the noble Baroness, Lady Hollis, for introducing this very important debate. It has been an impassioned debate and I welcome the opportunity to respond on behalf of the Government. The Government are undertaking welfare reform on a scale not seen since the introduction of the welfare state more than 70 years ago. Universal credit is essential to this agenda, transforming a benefits system hindered by bureaucracy and welfare dependency into one that places personalised support for claimants at its very heart. This support, tailored to the needs of the individual, is transforming lives across the country. People on universal credit have access to more tools than ever before to help them in their search for work and move into work faster than claimants under the system it replaces.

We know that these reforms represent a significant change for many people and we respect that, but this Government are committed to delivering UC safely and fairly to the best of our ability. At every stage of the process to date, we have worked to modify our approach with claimants’ experiences in mind. This is why we pioneered a system of advance payments for those embarking on a UC claim and why we recently ensured that all calls made to the UC helpline are free to users. We continue to spend more than £95 billion a year on benefits for people of working age, illustrating this Government’s commitment to a robust welfare safety net.

When the coalition Government came to power in 2010 it was clear that the benefits system was broken. For too long, and in too many cases, it made more financial sense for people to stay on benefits than to enter employment. A system had developed over the years that limited the hours claimants could work. Inadequate reporting requirements and complex interactions with other benefits all combined to remove incentives for people to take up work. Under UC, 86% of people are actively looking to increase the hours they work, compared with only 38% on jobseeker’s allowance. Even more troubling, the benefits system—the legacy system—made assumptions about people with health conditions or disabilities, wrong assumptions in many cases, condemning many to a life of limited or zero horizons. In contrast, UC brings coherence and simplicity to the welfare system. It replaces six benefit systems with one.

People now deal with one organisation only, through an easy-to-use online journal. They can access their UC account via smartphone, tablet or PC, enabling them to interact with the service all day, every day. However, I will say straightaway to the noble Baroness, Lady Sherlock, that they can also have home visits where necessary—that should be a 100% commitment. As I have stressed, the key achievement of this reform is that it puts work back at the centre of everything we do. This means that people claiming UC can see that work always pays. They can see exactly how much money they will receive each month. UC applies a consistent taper rate to earnings above a claimant’s work allowance, meaning that people are no longer penalised for taking on more work. Thanks to a data feed from HMRC, the UC payment adjusts automatically to take into account fluctuations in earnings. This removes the burden of paperwork and reporting on claimants that exists in the old system.

From the very start of the programme, we have published findings from pilots, carried out analysis and commissioned research into UC. We continuously measure the impact of UC on claimants through our Universal Credit at Work publications, which have acted to highlight the positive effect our reforms are having on individuals. As my noble friend Lady Stroud said, research from these reports shows that people in receipt of UC are more likely to be in work than are people on jobseeker’s allowance. UC claimants spend longer looking for work and consider taking jobs they would not previously have looked at. This positive trend was recently confirmed by new analysis published in September 2017 using a much wider sample group. The concept of “test and learn” is built into the DNA of UC. It allows us to quickly pick up on feedback from staff on the front line and use it to build improvements into each new release of the UC IT system.

During a recent visit to London Bridge jobcentre, I was delighted to hear from staff who praised the collaborative spirit of the new system, with claimants, work coaches and central and local government working together to further refine the service. I have to say, in response to the noble Baroness, Lady Donaghy, that these work coaches were amazing: they are not drowning, they are actually enjoying the work that they do and feel liberated and able to help people daily. In fact, we are employing 5,000 more work coaches to help the system across the country, so that people have this personalised support system. I am looking at the noble Lord, Lord Livermore. I visited a jobcentre in his borough, his designated territory as a Peer. I wonder if he has visited—I think not.

There has been much debate surrounding claimants’ ability to manage under UC’s monthly payment structure. Let me explain that the month-long assessment period is fundamental to the idea of UC. It means that the UC payment can be calculated on the basis of a full month’s income, using real-time information. Beyond the assessment period there is a further time of up to a week to make final checks and for processing the payment. We are working to reduce this time, but let us be clear: of the current tax credits population, nearly 70% are paid monthly or four-weekly.

On the issue of the responsibility for paying rent directly to landlords, the change in this policy is also backed by the evidence. Indeed, much of this policy was introduced back in 2008 under a Labour Government. In 2012 we established projects in six areas across the UK to test claimants’ capability in this area. The results, published in 2013 and 2014, show that the majority of social tenants can manage their finances: they are completely capable and want to manage their finances. We believe that it is important to improve the financial confidence of tenants, many of whom—I think that this is shocking—were previously unaware of how much rent was being paid on their behalf. That is dependency; it is not liberating. The reports highlighted the need to ensure that the right protections are in place, should people fall into arrears, which is why we have put in place a system of alternative payment arrangements for claimants who need them. This means that we can pay rent directly to a landlord to help protect those claimants at risk of eviction. In response to the noble Lord, Lord Kerslake, it is actually a choice: it is either the claimant, the landlord or, indeed, the DWP who can decide whether it is in the claimant’s best interest that payment be made direct to the landlord. To address the point raised by my noble friend Lord Farmer, this, alongside the system of advance payments that I have already outlined, will support those claimants already in debt and help to prevent others from falling into it.

UC also shines a light on those in debt—I saw this when I visited London Bridge—so that work coaches can help them resolve this situation with personal budgeting support. I reference my noble friend Lord Fink and absolutely agree with him about debt. The recently published response to the report of the Financial Exclusion Committee recommends a much stronger focus on financial education in schools. Improving financial capability is at the heart of the Financial Guidance and Claims Bill, currently passing through your Lordships’ House. We all want to see the issue of debt tackled.

For people with health conditions UC offers greater independence and opportunity. Unlike the old system, it does not limit the hours which people can work. This means people with health conditions do not need to choose between starting a career and getting financial support for their disability. As was discussed in your Lordships’ House the other day, it recognises that the ability of people with health conditions to work will change, off and on. UC means you can do both. My noble friend Lord Shinkwin, the noble Lord, Lord Low, and the noble Baroness, Lady Meacher, spoke about people with severe disabilities. The financial support available to them is more generous than before. I take issue with the noble Baroness when she said she did not believe the sums, as they are actually wrong. People in the UC equivalent of the ESA support group get double the ESA equivalent. When we come to move people from these benefits on to UC, we will protect their payments and top up any cash shortfall. We have simplified the system to make this happen. Previously, people with disability had to grapple with seven different payments. Now it is down to one, but it is simply not the case that they will receive less. We have invested £200 million more in universal support, an issue raised by some noble Lords, including the noble Lord, Lord McKenzie.

The rollout of UC has been undertaken carefully, beginning with a small group of claimants in the north-west in 2012. From May 2016, we started rollout of the full service, to all new claimant types, to be completed in September 2018. We will then take stock, before we start to move people on legacy benefits to UC. I am not sure whether all noble Lords are aware of the important point that we have not started moving people who are on legacy benefits to UC. This process of managed migration will not be complete until 2022, with transitional protections offered to legacy claimants throughout. If you were to believe some recent media reports, you could be forgiven for thinking that UC is in crisis: far from it. As noble Lords have said today, public scrutiny—including debates such as this—has a valuable role to play in putting government policy under the spotlight. However, let me be clear: having a job, earning money and building a career is the best outcome for individuals, society and the economy.

As several noble Lords have rightly said, countless studies show that meaningful work increases people’s happiness, fosters social inclusion, and improves mental health, life chances and life expectancy. It is important to stress that, of the total number of households that will move on to universal credit, we are currently only 8% of the way there. By January it will be just 10%; we are not going to rush things. As we roll out universal credit, those on existing benefits whose circumstances do not change will not be moved to universal credit. This will not happen until 2019 and we will provide transitional protection at that point, to make sure that people—homeless, disabled or otherwise—are not worse off at the point of change.

Work is a positive health outcome and UC puts it back at the centre of the conversation about welfare, a point made eloquently by my noble friend Lady O’Cathain. A society where the maximum number of people is in work is a happier, richer, stronger one, in which everyone can feel empowered. It is always the duty of a civilised society to provide help for those unable to support themselves. This is not the same as saying that a life on benefits is the only choice for a person with disabilities or health conditions. That is why this Government make no apology for focusing on what people can achieve, rather than on what limits them.

I turn to a number of points made by noble Lords which I have not yet addressed. I stress to the noble Baroness, Lady Drake, that the benefit freeze is the subject of the next debate, to which my noble friend Lord Young will respond. There has been a concerted effort to misrepresent UC and to paint jobcentres as forbidding places, undermining our efforts to continually improve the system. It is important to make it clear that every two weeks the work coaches in every jobcentre pool their ideas for change. All those ideas and thoughts about improving the system are fed into the centre. We are taking those on board and working with them.

Advance payments for UC are paid within five days and are interest-free. If someone is in immediate need, they will receive a fast-track payment on the same day. We have taken on board the need to increase the awareness of advance payments and their availability, and have informed all work coaches of this. The latest data shows that 52% of new claimants on universal credit are receiving an advance. That shows that people are aware of this support, and using it. Unlike what one noble Lord said, everyone is entitled to an advance payment.

On the subject of jobcentre closures, we are not reducing the level of support we provide to claimants through the reduction in the number of jobcentres—far from it. We are actually streamlining the number. I go through the contracts for the commercial leases, so I know that we are saying goodbye to some that were not accessible or good places to come into. We want to improve and streamline the whole experience for people going into a jobcentre. I again urge noble Lords to experience this themselves: they will see that jobcentres are worlds apart from what they used to be like. It is important for us to modernise and improve that experience. When we close a jobcentre, an outreach service is always put in place within the community, to make sure that local people can access support to get to work.

My noble friend Lord Cormack mentioned targets to sanction claimants. There are no such targets for jobcentre staff. Sanctions encourage claimants to meet their personalised claimant commitment, which is tailored and agreed between the claimant and work coach. On childcare, the best way to help families improve their lives is by supporting parents to get into employment. Universal credit offers parents unprecedented personalised support, including paying up to 85% of childcare costs. This increase to 85% will benefit up to 500,000 working families by an average £60 a month. This means that a growing number of families will get more support to move back into work. I pay tribute to the work of the noble Baroness, Lady Armstrong, who referred to kinship carers, as did the noble Lord, Lord Kirkwood, in the context of welfare reform. I wish to make it clear that if a claimant already has two children in their household and takes on responsibility for an additional child through kinship care, the Government do not wish to dissuade this from happening in the interests of the child, and an exception is provided. The exceptions are an important part of this policy and are there to protect those who are not always able to make a choice about the number of children in their family.

There is much more that I would have like to have said in response to points made by noble Lords. I conclude by reiterating that UC prepares for work, and helps people to get into and get on in work. The Government are delivering this once-in-a-generation change in a controlled way. We are taking 12 years, from inception to final rollout. At each step of the way we have assessed the impact of UC on claimants. This is a work in progress and we will keep working. As the noble Baroness, Lady Sherlock, said, let us work together to make this right.

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My Lords, I do not have the time—understandably, given the pressure of other debates—to challenge so many of the assertions the Minister made in her reply which I have to say, from my work on the subject, are not well founded. I thank everybody who has taken part in today’s debate. The meaningful, moving, compassionate, well-informed examples and evidence that have come from around the House show how many of your Lordships around the House are seeking to walk in the footsteps of claimants rather than sign up automatically—I am not accusing the Minister of this—to leafy government assurances which from my research are not supported by the evidence.

None the less, we have a Budget coming. I say to the Minister—I know she and her colleagues in the department will fight for this—that there is a choice. The Government can choose in the Budget to align themselves with the just about managing and the even more deprived—

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I apologise, but the time allotted for this debate has now elapsed, and I must put the Question. The Question is that this Motion be agreed to.

Motion agreed.