Skip to main content

Petitions

Volume 638: debated on Wednesday 28 March 2018

Petitions

Wednesday 28 March 2018

Observations

Work and Pensions

Universal Credit programme

The petition of residents of Bishop Auckland, Shildon, Spennymoor and Teesdale,

Declares that the Universal Credit programme is pushing people into poverty, debt and homelessness.

The petitioners therefore request that the House of Commons urges the Department for Work and Pensions to pause and fix Universal Credit before its rollout in Bishop Auckland, Shildon, Spennymoor and Teesdale.

And the petitioners remain, etc.—[Presented by Helen Goodman, Official Report, 30 January 2018; Vol. 635, c. 793.]

[P002096]

Observations from the Secretary of State for Work and Pensions (Ms Esther McVey):

Universal Credit was introduced with cross-party support to replace the old system, which is complicated, inflexible and involves different agencies and Government Departments. The cliff edges and complicated hours rules would often mean that people were put off from taking up work or trapped into being unable to take on more hours, due to the prohibitive tax rates they would face on earnings. We believe we should have a welfare system that supports people when they need help, assists people into work, and is fair to those who pay for it.

Universal Credit is revolutionising the welfare system by making work pay. It simplifies the system and provides a single payment for people in or out of work, which ensures that people are always better off working and better off working more. The single, simple, taper means that payments reduce in a transparent and predictable way as earnings increase.

Universal Credit provides support for those who cannot work and those who need help, including an unprecedented level of personalised support. People required to look and prepare for  work receive tailored support managed through personal work coaches, who know each person’s case and have more tools and flexibility than ever before to help people prepare for work and get a job.

Of course, there will always be people who are unable to work and it is right that we support them. This Government continue to spend to more than £95 billion a year on benefits for people of working age. This shows the Government’s commitment to a robust welfare safety net.

Last year DWP launched the new Personal Support Package for people with health conditions on Employment and Support Allowance and Universal Credit. This includes 300 new Disability Employment Advisers in jobcentres across the country, the recruitment of new community partners in jobcentres across the country, and more personalised support, including one-to-one health and work conversations.

We know Universal Credit is having a positive impact on employment outcomes, and has been proven by three separate research studies.1 Qualitative research also shows a positive impact on employment behaviours. Compared to the old system, people on Universal Credit are 4 percentage points more likely to be in work after 6 months2, spend more time looking for a job, more time looking to increase their earnings and will actually consider work they would not have considered doing before.3 In our research, 86% of UC claimants working less than 30 hours were trying to work more hours, compared to 38% under Jobseeker’s Allowance.4

Universal Credit has been rolled out in a way that allows us to continue to make improvements. The system is updated on a fortnightly basis and Work Coaches are able to feed into this process, ensuring we respond to issues identified on the front line. Such improvements have included the introduction of measures to make it easier for claimants who need them to have access to advance payments, and making our telephone lines free-phone numbers.

Furthermore, in November 2017 the Chancellor of the Exchequer announced a set of Universal Credit Budget measures worth £1.5 billion in order to address concerns raised around the first assessment period, and helping support the vast majority of claimants transitioning onto Universal Credit.

Advances are available for claimants who need them at the start of the claim and, from January 2018, claimants who require support can repay their advance over 12 months interest-free, instead of the previous 6 month period, making it easier for claimants to manage their finances. They can also get an advance of up to 100% of their estimated monthly entitlement while they wait for their first payment rather than 50%, effectively removing the wait until the first payment altogether.

We have already put in place measures to raise awareness of advances, including guidance for staff and a communications campaign in Jobcentres. And we will soon be introducing functionality to allow claimants to apply for advances online, further supporting claimants in accessing this important support.

Since February 2018, the 7-day waiting period has been removed for all new Universal Credit claimants, reducing the first assessment and payment period to 5 weeks and increasing their entitlement by 7 days. Around 750,000 new UC claimants will benefit each year, and the average household will benefit by around £160.

Furthermore, all claimants already receiving support towards their housing costs (Housing Benefit, HB), will, from April 2018, be paid an additional two weeks housing benefit at the beginning of their claim to support them as they transition onto Universal Credit. The HB transition payment measure benefits claimants by an average of £233. This will help reduce the issue of managing their rent payments whilst claimants transition to monthly payments of Universal Credit.

All these measures amount to a comprehensive and wide-ranging package designed so that claimants either receive more, or earlier, access to their benefits than previously.

Evidence5 shows that work is the best route out of poverty, and Universal Credit helps people into work and progress in work. The smooth taper under Universal Credit gives people a clear incentive to increase their hours, as unlike the old system, taking on extra work will always pay. The childcare offer under Universal Credit is also more generous than the legacy system, covering up to 85% of eligible childcare costs, rather than 70% underworking Tax Credit. This is designed to help support more parents into work. In addition, when Universal Credit is rolled out an estimated 50,000 more children will benefit from a free school meal compared to the previous benefits system.

The Government have taken a number of steps to reduce the risk of problem debt, including capping payday lending costs and promoting savings. Within Universal Credit, we also have interest-free advances and a system of priority deductions to help claimants who have got into arrears.

We have also made funding available to Local Authorities to deliver Universal Support in conjunction with Jobcentre plus and local partners. This includes personal budgeting support to help claimants manage their finances through the transition to Universal Credit. Work Coaches will maintain an ongoing conversation with claimants about the financial capability and there are a range of tools available to help claimants including a Personal Planner, Budgeting Support guidance and a Money Manager tool provided by the Money Advice Service. If debt problems are identified the claimant will be referred or signposted to external specialised debt support services.

Many of our reforms are directly aimed at providing further support to claimants with their housing costs and helping to prevent any risk of homelessness.

Along with the improvements to advances and the Housing Benefit transitional payment, we have announced changes to ensure that vulnerable claimants in the private sector get support putting alternative payment arrangements in place for managed payments of rent direct to their landlord. Other alternative payment arrangements include more frequent payments and splitting payments between members of a household.

We know that there has been concern that rent arrears increase for people when they claim Universal Credit. However, research by the National Federation of Arm’s Length Management Organisations shows that over three-quarters of their tenants were already in arrears before their Universal Credit claim started. Some arrears amount to a pure accounting phenomenon—so called “book arrears” are caused when a claimant moves from paying their rent two weeks in advance to paying it a month in arrears on Universal Credit, and these clear over time when payment cycles settle down. As set out above, claimants will also receive two weeks additional housing benefit when they transition onto Universal Credit from April 2018.

Whilst we have introduced improvements in the first assessment period to support claimants struggling with the move onto Universal Credit and prevent arrears, we also know that the majority of claimants do succeed in paying their rent, managing their monthly payments and clearing their arrears over time. And our research shows that after four months, the proportion of Universal Credit claimants who were in arrears at the start of their claim, fell by a third.6

DWP’s priority is to ensure homeless people get the appropriate support they need to move into work so they can succeed and rebuild their lives, and we have outlined how Universal Credit is helping to do just that. But the issue of homelessness is much broader than that, and the solution requires a cross-government approach.

That is why, in October 2018 as part of the Homelessness Reduction Act, Jobcentres in England will be duty bound to refer someone they consider to be homeless or threatened with becoming homeless to a local authority housing team within 56 days.

The Government have allocated over £1 billion through to 2020 to reduce homelessness and rough sleeping. We have established a Rough Sleeping and Homelessness Taskforce to implement a cross-government strategy to achieve our objectives of halving rough sleeping by 2022, and eradicating it altogether by 2027. The Taskforce will bring together Ministers from key Departments to develop a cross-government strategy to tackle rough sleeping and address the wider issues of homelessness prevention and affordable housing.

We understand, that the scale and nature of the change represented by Universal Credit may cause some anxiety. However, unsubstantiated claims about poverty, debt and homelessness being caused by Universal Credit are unhelpful and deter some of those who would benefit from Universal Credit from transitioning onto it. As we have seen the UK Statistics Authority has even stated that some comments of Universal Credit causing poverty and debt have not been supported by the evidence on which they rely.7

We have re-profiled our rollout plans to enable us to deliver significant improvements benefiting claimants, whilst continuing to manage roll-out, safely and securely. Stopping or pausing roll-out would mean confusion for claimants already receiving Universal Credit. We will continue to roll out Universal Credit at a measured pace to ensure the real improvements it is delivering are extended to more people. We will continue to listen to our claimants and stakeholders and improve the system as we proceed to ensure we get this right.

Countless studies show that meaningful work increases people’s happiness, fosters social inclusion, improves mental health, life chances and life expectancy. Work is a positive health outcome and Universal Credit promotes this. A society where the maximum number of people work is a happier, richer, stronger society.

1 https://www.gov.uk/government/uploads/system/uploads attachment_data/file/644541/universal-credit-employment-impact-analysis-update.pdf.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/403546/Universal_Credit_estimating_the_ early_labour_market_impacts_-_ad_hoc_19.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/481827/universal-credit-estimating-early-labour-market-impacts-dec-2015.pdf,

2 https://www.gov.uk/government/uploads/system/uploads/ attachment_data/file/644541/universal-credit-employment-impact-analysis-update.pdf

3 https://www.gov.uk/government/uploads/system/uploads/ attachment_data/file/643952/understanding-how-universal-credit-influences-employment-behaviour.pdf

4 https://www.gov.uk/government/uploads/system/uploads/ attachment_data/file/481865/universal-credit-extended-gateway-evaluation.pdf

5 https://www.gov.uk/government/uploads/system/uploads/ attachment_data/file/436482/rr900-child-poverty-transitions.pdf

https://www.gov.uk/government/collections/households-below-average-income-hbai--2

6 https://www.gov.uk/government/uploads/system/uploads/ attachment_data/file/481865/universal-credit-extended-gateway-evaluation.pdf

7 https://www.statisticsauthority.gov.uk/wp-content/uploads/ 2018/02/2018-02-02-Letter-from-Sir-David-Norgrove-to-Ms-Abrahams-MP.pdf