Universal Credit

18th October 2017

David Gauke responds to an Opposition Day debate on universal credit roll-out.

Today we have seen yet another excellent set of labour market statistics: unemployment is 1 million lower than in 2010 and youth unemployment has gone down by 415,000 over the same period. Underneath those raw statistics lie the work and effort of millions of families across the country who are keen to get on and make the best of their lives: people who are in work but want to earn more, people who are out of work but really want to get a job. Young and old all deserve the opportunity to maximise their potential. That is what universal credit is all about.

Will the Secretary of State give way?

Let me make a little progress.

When it comes to universal credit, there is much talk about supporting the principles behind the reform, and I welcome that. Before turning to the issues raised by the hon. Member for Oldham East and Saddleworth (Debbie Abrahams)—and I will be taking plenty of interventions—I think it would be helpful to the House to articulate what those principles are.

The fundamental purpose of universal credit is to assist people into work. It is through work that people can support themselves, obtain greater economic security and progress in life. Universal credit does that by making work pay.

Let me finish on the principles, and then I will take plenty of interventions.

We inherited a welfare system that puts in place barriers to people fulfilling their potential. If those on jobseeker’s allowance do more than 16 hours of work, they must go through the disruption of stopping their benefit claim only to start another. Many on employment and support allowance can be faced with a choice between financial support or work while we know that many thousands would like, and would benefit from, both. Once a person is in work, they are all too often caught by the hours rules in tax credits. Universal credit cuts through that by taking six different benefits and replacing them with a single system: a system where claimants receive tailored support to get them into work; a system where claimants have to deal with only one organisation, not three; and a system that ensures it always pays to work and always pays to progress.

It is not the principle, but the practicality that is at issue. [Hon. Members: “Ah!”] The principle of getting people back into work is something that we on the Labour Benches accept. The citizens advice bureau, the Trussell Trust and even John Major are saying that universal credit should be delayed, because it is increasing poverty and leading to debt and rent arrears. Are they wrong?

My argument is that we should not be pausing this. May I just say that I welcome the clear expression of support for the principle of universal credit? That is helpful. The case I will make today is that the principles lead us to a design that is focused on making work pay. It is diminishing the differences between being out of work and being in work, and can make a significant difference.

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I give way to my right hon. Friend—[Interruption.]

The hon. Member for St Albans (Mrs Main) has just been promoted. The Secretary of State needs to gesticulate whom he means with greater clarity.

I thank the Secretary of State for that promotion. I look forward to receiving it in the post.

Is the Secretary of State any more aware than I am of the topic of this debate? Yesterday, the Opposition wanted to fix universal credit. Today, the word “fix” has been dropped. It seems that the Opposition want to pause but not fix. Has he any greater awareness of this matter?

That astuteness demonstrates why my hon. Friend should become my right hon. Friend sooner rather than later.

It is a very revealing point. There is no real attempt to fix this. This is about pausing it and wrecking it.

Has the Secretary of State seen the survey of 105 local councils, which showed that of claimants who claim universal credit, over half of the council tenants are in rent arrears compared with only 10% of those on the old housing benefit. Does that not show that this system needs to be paused and fixed?

Part of the issue is that that is not comparing like with like. The right hon. Gentleman will understand that the selection of people who will be on universal credit will be of a different group than the housing benefit population as a whole. [Hon. Members: “Why?”] The reason is that in many cases, going on universal credit involves a change of circumstances, and that change of circumstances may in fact be a reason why people are in arrears. [Interruption.] May I just make this point? I know that the right hon. Gentleman has concerns about how we address the issue of the early period, so I will say a little bit more about it. We are seeing improvements in payment timeliness, and people are getting more support early so the reasons for increased rent arrears will not necessarily apply.

I want to make this point about what universal credit does. The work done within universal credit to give people the support to prepare for work can be too easily missed from debate.

I will just make a little bit of progress.

Universal credit gives a person a work coach, who provides personalised support, helping them to stay close to the labour market and overcome barriers to work. A universal support package provides people with assistance to build confidence and competence with IT, manage their universal credit account online and access online job search facilities and training. Universal credit makes being out of work more like being in work, because people are paid monthly, as 75% of employees are, and because it is paid directly to tenants instead of to their landlord. It also stays with recipients during the transition from being out of work to being in work.

The Secretary of State makes a really important point about the unemployment figures and the importance of getting people into work. Will he join me in congratulating my constituency, which has one of the lowest levels of unemployment—the sixth lowest—in the country, with only 375 people unemployed or claiming unemployment benefit?

My hon. and learned Friend is right. We need to build on the progress that has been made in her constituency and, indeed, generally across the country, and further assist people into work.

I will give way to one of my predecessors as Secretary of State.

The Secretary of State is being very generous with his time. Did not the shadow Secretary of State rather give the game away when she denied any link at all between universal credit and the increase in employment levels? Since 2010, the Labour party has set its face against welfare reform. In 2010, Labour Members ran to the barricades to defend an outdated system that trapped people in poverty and worklessness for years.

My right hon. Friend is absolutely right. This is yet a further example of the Opposition turning their back on reforms. I listened to the remarks of the shadow Secretary of State—

Will the Secretary of State give way?

I am just making a point about the speech we just heard from the shadow Secretary of State, who has set her face against any form of conditionality in the benefits system, as far as I can tell. She fails to appreciate that the best way of helping claimants is to get them into work. That sometimes requires a change of behaviour, and a degree of conditionality within the system is required to ensure that people change their behaviour so they can make progress.

On this side of the Chamber, we live in the real world of our constituents. People suffering from motor neurone disease came to see us in Westminster yesterday to say that on top of the agony of their disease, they faced the indignity of fighting for their full entitlement under PIP. Today a landlord came to see me in my office, saying that he will never again let to tenants on universal credit, and a single mum told me that she is desperate because, with roll-out just before Christmas, she and thousands of others face a bleak Christmas. Does the Secretary of State begin to understand—

Order! I am sorry to have to shout, but the hon. Gentleman, though he speaks with great force and eloquence, took too long. We must have shorter interventions, as it is not fair on others.

Let me turn to the important point of claimant commitment.

Will the Secretary of State give way?

I will give way, but not for a moment.

Throughout this period, claimants have a flexible, clear and tailored claimant commitment so they fully understand their responsibilities. The commitment supports and encourages them to do everything they can to move into or towards work, or to improve their earnings. The only thing we ask is that claimants meet reasonable and agreed requirements that take into account their individual circumstances and capability, including mental health conditions, disability and caring responsibilities. I hope that this approach to benefit conditionality will have the support of both sides of the House, including the hon. Member for Wallasey (Ms Eagle).

The Secretary of State must surely realise that the way in which the system is being administered is leaving people penniless and possibly destitute. He must address that point. The Government are rolling all the six benefits into one; if that is then not available to people for six weeks, there are people who cannot afford to survive in that time. The loans, which have to be paid back, are not an adequate response. Will the Secretary of State admit the human suffering that is happening in all our constituencies and deal with that particular point?

Let us be clear: if people need support under this system, they do not have to wait for six weeks. [Hon. Members: “They do!”] They do not have to wait for cash in their pocket from the state because they can get an advance, which is normally paid within three days. If someone literally does not have a penny, they can get that money on the day. There is a responsibility on all of us as constituency MPs, when we meet our constituents who face difficulties of this sort, to inform them of the availability of advances, not to scare them with the belief that they have to wait six weeks when they do not.

The points being made by Opposition Members are disappointing in one particular way. There is a strong responsibility on all of us as Members of Parliament to help our constituents when they get into problems, rather than trying to weaponise them politically. One way this could be done is to encourage our largest housing associations to have an implant inside the Jobcentre Plus so that at the very moment somebody goes on to universal credit, the housing association is there and able to make sure they get the necessary advance so that they can pay their rent. Does the Secretary of State agree?

My hon. Friend makes a good point. Co-operation between housing associations and the Department for Work and Pensions is an important part of improving the service. We are seeing improvements in how that operates and I hope it continues to improve further.

My constituency was a pilot scheme for universal credit, and I regularly meet the jobcentre and the citizens advice bureau. The important point is that there were teething troubles in the early days, but people can now get a loan on the day. The worst wait is seven days, depending on the individual’s circumstances. The problem—if there is a problem that has to be addressed—is how the loan is paid back. The repayment cap is currently at 40% of payments. Would the Secretary of State look into a 10% rate instead, to help the system flourish even further?

The advance is typically paid back over six months, so it is essentially a deduction of around 8% from universal credit payments for the first six months. The figure of 40% takes into account all deductions that may conceivably apply in such circumstances.

I have given way numerous time already, probably a multiple of the number of times the shadow Secretary of State gave way. I do not want the House to miss this point: universal credit represents a generation-changing culture shift in how welfare is delivered and how people are helped, creating a system that allows people to break free from dependency, take control of their lives and move into work. Our analysis shows that 250,000 more people will be in employment as a result of universal credit when it is fully rolled out. Universal credit is picking up from a deeply flawed system and striving to solve problems that were previously thought unsolvable.

If the Secretary of State’s intention really is not to cause hardship and distress, why will he not get rid of that automatic six-week wait? Many people still do not know about it. Many do not know to go to their MP to seek solutions. Get rid of it. What he is talking about is a loan, which has to be paid back over six months and which many people are not eligible for. The point is that the way the system is designed is making people fall into hardship, and it is deliberate. It is not an accident. It is absolutely an integral part of the design. Change it.

I will come back to the six-week period.

We have to remember that we have inherited an old system, in which complexity and bureaucracy often served to stifle the independence, limit the choices and constrain the outlook of its claimants. The disincentives in the legacy system to work or earn more have been removed, along with the complex hours rules and cliff edges.

I have to make some progress.

Claimants now no longer need to switch between benefits if they move in and out of work, so they are free to take up short-term and part-time work without worrying about being worse off or their claim ending. It is working: our research shows that compared with people in similar circumstances under the previous system, universal credit claimants spend more time looking for work, apply for more jobs, take up jobs that they would not even have considered previously, and take on more hours or extra jobs. That is not an abstract discussion; this is real people’s lives being improved because of universal credit.

Eighteen months ago, I visited Radian, a housing association in my constituency. Radian expressed to me and to our hon. Friend the Minister for Employment concerns about the impact of universal credit on tenants. Eighteen months later, those people are in work, paying the rent and working with the housing association. The outcome is positive. Labour Members are simply scaremongering.

I am grateful to my hon. Friend for highlighting the reality. This is not an abstract discussion; we are discussing real people’s lives.

Thanks to a Conservative Government, we now have almost full employment in this country. For a number of people who claim unemployment benefits, their mental health is a barrier to getting work. What assurances can my right hon. Friend give us that the universal credit system will either help people with low-level mental health conditions to get back into work, or give them the support they need for their future?

My right hon. Friend makes a good point. I was about to give an illustration of the way universal credit can work involving a claimant with learning difficulties, who was out of work when he came to the jobcentre. His work coach provided tailored support, building his confidence and capability. That man is now in work. He told us that he is proud of himself for getting into work, and that he did not think it would have been possible without universal credit. He is now looking forward to the future. That personalised support, tailored to individual circumstances, is much more widely available.

Let me give another example. A university graduate had not previously had a job but was desperate to get into work. Her work coach helped to build her skills—interview skills and application writing—and she was soon successful in gaining a 16-hours a week job. When she was offered overtime, the work coach supported the claimant flexibly, rescheduling her Jobcentre Plus appointments so they did not clash with her new hours. The claimant could accept the overtime, confident that she would remain on universal credit and continue to be supported by her work coach.

Those are true testimonies of the powerful potential of the reform to change lives for the better.

Does the Secretary of State agree that one of the best ways to help people into work and support them is to deal not only with the six-week wait, but with the fact that—according to Citizens Advice—one in three people now wait longer than six weeks, and one in 10 wait longer than 10 weeks?

Let me deal with the points on the waiting period and timeliness. I acknowledge the concern. Returning to the intervention from the hon. Member for Brighton, Pavilion (Caroline Lucas), we have to remember that a waiting period is fundamental to the structure of universal credit, which pays people monthly, mirroring the world of work. Universal credit also automatically adjusts payments to take account of a claimant’s income in a particular month, meaning that a claimant will always be better off in work. To do that, payments necessarily have to be made in arrears.

We know that some people cannot afford to wait six weeks for their first payment, which is why we have advances that provide those in financial need with up to their first universal credit payment. Increasing numbers of people claim that; the numbers from July show that the majority of claimants did so. Claimants who want an advance payment will not have to wait six weeks; as I said, they will receive the advance within five working days, and if someone is in immediate need the advance can be paid on the same day. I recently improved the guidance to DWP staff to ensure that anyone who requires an advance payment will be offered it up front.

I will make a little more progress before giving way again.

Of course it is important that we get people the right money at the right time. As UC full services roll out, there have been significant improvements in verifying claims and making payments on time. Our latest data show that 80% of new claimants are being paid in full and on time; 90% receive some payment before the end of their first assessment period; and, taking into account advances, 92% of new claimants receive some support within six weeks. More than 1 million claims to UC have been taken. The live service is available in every part of the country and the full service version is already in 135 of our jobcentres for new claims across all claimant types.

The Secretary of State says that advances are typically paid within three days. Of course, an advance in crisis funding is an admission that the system is failing, but aside from that, what evidence does he have for saying that payments are made within three days? The answer to a written question that I received this week shows that the DWP is not collecting that data.

For a start, it is not crisis funding; it is an advance giving people flexibility in when they receive their universal credit payments. Our commitment is to deliver within five days, and my understanding is that typically payment is made within three days. We are providing support to people earlier. I acknowledge the concerns. I have seen the hard cases of people who have apparently gone weeks—sometimes months—without support. What we are saying is that they can get an advance quickly, as long as we have verified their identity.

May I back up my right hon. Friend, drawing on work I have done in my area and on discussions with citizens advice bureaux? When people have needed advance payments, they have received them incredibly quickly, within two or three days, and the jobcentre staff tell me that universal credit is helping them to help people to get into work. Does he share my frustration at hearing so much negativity from Labour Members and never any positives?

I certainly do. This is an important matter and strong views are held in all parts of the House, but I urge right hon. and hon. Members to engage with their local jobcentres. When they talk to jobcentre staff, many Members hear what my hon. Friend just described—that the universal credit system is delivering for people, giving them the opportunity to get jobs. That is exactly what we are determined to do.

Universal credit is working and the roll-out will continue—to the planned timetable. We are not going to rush things. It is more important to get this right than to do it quickly. At the moment, of the total number of households that will move on to universal credit, we are currently 8% of the way there. By January, it will be 10%. Across the country, we will continue to improve our welfare system to support further those who aspire to work.

I have given way numerous times. I am conscious that, as the shadow Secretary of State repeatedly said, 90 speakers want to get into this debate, and I have spoken for nearly half an hour, which is more, I am sure, than the House can endure.

We are under no illusion but that we must continue to work together to resolve issues as they arise and ensure a successful roll-out. I want to improve the system. I want constantly to refine the system. I want to make changes where necessary to test and learn and improve. I am determined to do that. I have made an announcement today along those lines about telephone lines.

We all welcome the Government’s concession on the premium phone line, but I met the CAB on Monday and it tells me that advisers are sometimes waiting up to half an hour to get through. Would the Secretary of State consider an MP-type hotline for advisers from the CAB and other welfare advisers?

First, we have never had a premium line; it is the same sort of system that one of the hon. Gentleman’s constituents would find if he called him and booked into a constituency surgery. It has never been a premium line, but we are changing it. On the average waiting times, I think that in September it was five minutes and 40 seconds. As for his particular proposal, let me take that away. Very often the CAB needs to call the local jobcentre rather than the national centre, because if it wants to deal with an individual case, dealing with the jobcentre would be more helpful.

I thought that there was a helpline for MPs to deal with all our constituents’ cases—unless it is a courtesy extended only to North Dorset.

My hon. Friend is absolutely right, but to be fair to the hon. Member for Kingston upon Hull East (Karl Turner), I think that he wants to extend the helpline that we have or offer a similar service to advisers. As I say, I will look at that, but very often advisers need to contact the local jobcentre.

I have spoken for a long time and I want to push on.

The approach that we are taking is to test, to learn and to improve, because we are delivering a really important and fundamental change, moving towards a more dynamic system that is already improving lives and has huge potential to do more.

Let me say something about the approach we have heard from Labour Members. We have adopted, I believe, a responsible approach. Of course, there are legitimate questions to ask, and no Government can object to scrutiny, but let us not pretend that that is what we are getting from Labour Members. What we are hearing today is not constructive opposition—not a plan to reform universal credit, but an attempt to wreck it. It is an attempt to paralyse a policy that will help 250,000 more people get into work and to block a reform that will increase opportunity. It is an attempt to play politics but with no attempt to set out a real alternative. I say to my colleagues, well, let them do that, but we will proceed. We will address the historical failures of our benefits system, we will increase opportunity, and we will deliver a welfare system that puts work at the heart of it.

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