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Universal Credit

Volume 803: debated on Tuesday 2 June 2020


Asked by

The Question was considered in a Virtual Proceeding via video call.

The universal credit assessment period and payment structure are fundamental parts of its design. An assessment period must run its course, which includes a feed of earnings data from HMRC, before an award reflecting actual household circumstances can be calculated. This can be achieved only by having a model based on paying in arrears, and we have no plans to change that.

I thank the Minister for that Answer. There have been 2.8 million claimants for universal credit since lockdown, and I fear many more will come. They are all being hit by the five-week wait. The Resolution Foundation found that on average, people going on to universal credit see their disposable income almost halved. All Ministers will offer is an advance, but that pushes people into debt and asks them to live on less than universal credit for a whole year to repay the debt. The Government have steadfastly resisted a deluge of calls from across the board to abolish the five-week wait or at least to turn advances into grants that do not have to be repaid. Why will they not do it?

Non-repayable advances cannot be implemented without significant development of the universal credit system. No one has to wait five weeks. Advances are available urgently. The repayment schedule is to be extended to 24 months in 2021. Repayment can be delayed by three months in certain circumstances, and we removed the seven-day waiting period. This is all backed up by support from work coaches.

My Lords, given the greatly increased burden on the DWP, can my noble friend indicate what measures are being taken to ensure that the benefits system can cope?

I am pleased to be able to tell the House that we have seen unprecedented hard work and dedication by the staff of the DWP to make sure that the unprecedented number of claims have been paid in a timely and efficient manner. Our system is standing up to the challenge, and I am pleased to say that we have redeployed staff and introduced more IT equipment. Our highest priority is to pay the benefits that people need, and we are coping with that.

My Lords, I declare an interest as chair of Feeding Britain, which has found that the poorest groups in our society are the only ones who have suffered a reduction in disposable income. They cannot afford to wait these five weeks. Will the Minister set a long-term target of reducing this wait and a short-term goal of introducing, with immediate effect, the department’s policy, which is not due to take effect until October 2021, of further easing the rate of repayment of advances?

The noble Baroness makes a very good point and I understand where she is coming from, but I must tell her that there are no plans to do as she requests. Bringing forward the October 2021 easement is not something I have heard discussed, but I am happy to go back to the department and find out.

My Lords, according to a recent Resolution Foundation survey, two-fifths of new UC claimants had not asked for an advance because they feared getting into debt—and debt it is, albeit interest-free. Will the Government therefore follow the foundation’s advice and at the very least suspend repayments for some months, following the welcome precedent set with other debt repayments, which shows that it is administratively possible, and if not, why not?

Non-repayable advances cannot be implemented without significant changes to the system; this is not currently our policy intent. Funding to do it would be needed from the Treasury, costing an estimated £2 billion to £2.7 billion. With an advance, there are 13 payments over a year instead of 12, and as of next year the period over which advances have to be repaid will be extended from 12 months to 24 months.

People who are suddenly faced with zero income are unable either to wait five weeks for funds or to repay an advance by receiving lower payments, as required by universal credit. Will the Government consider providing an additional dedicated hardship fund via local authorities to provide immediate relief for people in urgent need?

The issue of a local hardship fund has been raised and there is a recommendation for it to be put in place. I am afraid that we will have to wait for the outcome of those deliberations.

My Lords, the problems of the five-week wait have already been highlighted by other noble friends, and we should not underestimate their seriousness, but perhaps I may draw attention to some other temporary changes in universal credit. There has been an increase of £20 per week, which Ministers have stressed is a temporary, emergency measure, but the IPPR has calculated that if this had been in place since 2015, the UK would have entered this crisis with a pretty staggering 500,000 fewer people in poverty. Do Her Majesty’s Government plan to make this increase in universal credit a permanent feature, particularly as it would be such a help to children?

My answer to the right reverend Prelate is that I know of no intention to make it a permanent arrangement.

My Lords, can my noble friend explain the measures that are in place to support claimants with their housing costs?

We have increased the local housing allowance to cover the lowest 30th percentile of the local market, and alternative payment arrangements to landlords have been put in place. If claimants have great difficulties, they can speak to their work coach or client adviser, who, if there is a way to help them, will do their best to find it.

My Lords, the five-week wait has significantly increased household debt and anxiety as a result of council tax arrears. Will the Minister please press the Government to issue clear guidance to local authorities that collection and enforcement activity on council tax arrears, including all bailiff contact, should be suspended for a minimum of three months?

I am happy to take that point back to the department and will write to the noble Baroness in due course.

Given that the Chancellor has shown flexibility in designing his deal for the unemployed, will the Government consider suspending, at least temporarily, all the cuts which people on universal credit have had to suffer and which, in any case, should have been removed? Will they suspend them for, say, another 18 months?

I do not wish to be negative in any way but I have no knowledge of the Government considering that. Therefore, I am unable to say more than I have already said.

Does not the mechanics of the whole-month approach to changes in circumstances create arbitrary fluctuations in income that are hard for those on low incomes to manage?

I am not sure that I agree with the noble Baroness about the complexities of the changes. As we have made clear all along, we are trying to make the universal credit system replicate the world of work. However, I am aware that people on low incomes have difficulties, and I assure the noble Baroness that the Government want to do all they can to help them.

My Lords, can my noble friend expand a little on the previous question and explain how the structure of monthly payments compares with the legacy system, which had much shorter time- scales?

Universal credit is simpler and fairer than the legacy system. It is designed to target resources at those who need them the most and to provide support for people who cannot work. There is a monthly reconciliation, which we are absolutely clear is better than the annual reconciliation.

My Lords, the time allowed for this Question has elapsed. I offer my congratulations to all concerned, as we have got through all 10 questions. We come to the second Oral Question, from the noble Baroness, Lady Randerson.