Meeting of the Parliament 03 October 2017
Presiding Officer,
“Universal Credit ... remains the right thing to do. The current system is fragmented and traps people in poverty. The prospect of an integrated benefit system that responds to people’s changing circumstances is a prize worth having.”
Universal credit is
“an important tool for tackling poverty”.
Those are not my words; they are the words of the Joseph Rowntree Foundation in April this year.
Universal credit rolls six benefits into one, is expressly designed so that work always pays and is a much more flexible system that can be readily tailored to the individual’s particular and often changing needs. In all those ways—and more—it is a reform to be welcomed.
In comparison with the old system that it replaces, universal credit works. More people on universal credit are in work than was the case under jobseekers allowance and, on average, they stay in work longer and earn more. Unlike universal credit, the old system punished work—it failed to get young people into work and it subsidised low wages by letting the tax credit bill get completely out of control. For all those reasons, and contrary to what the minister has just said, there should be no going back to any of that.
None of that is to say that universal credit is without its problems, and I will address those directly. It has been said—we have just heard the minister say this—that the delivery of universal credit is pushing people into poverty, driving up household debt and forcing people to rely more heavily on food banks. Those are deeply serious concerns, and they are the very opposite of what universal credit was designed to deliver.
Universal credit is designed to be a flexible and bespoke social security system fit for purpose in the 21st-century labour market, to make it easier for people to escape a lifetime of welfare dependency and to move to the dignity, fairness and respect that a good job brings. If the evidence on the ground is that that is not happening, that evidence needs to be taken very seriously indeed.
On the detail of the delivery of universal credit, it is said that three aspects in particular are causing problems. First, that payments are made monthly not fortnightly; secondly, that the housing element of universal credit is paid directly to households and not to landlords; and thirdly, that new claimants have to wait six weeks—and sometimes, it is reported, longer than that—before they receive their initial payment.
I will address each of those aspects in turn. The first two—monthly payments and payments to landlords—are among the matters that, thanks to the Smith commission agreement, we in this Parliament can change. As we heard from the minister, those changes have been made and will come into force tomorrow. Incidentally, those changes were made with the support of the Conservative members of the Social Security Committee.
That leaves only the third reported problem: delays in the initial payment. The Social Security Committee on which I sit and the House of Commons Work and Pensions Committee have written to the DWP about that. Let us look carefully at what the DWP has said.
On 1 February, Neil Couling, the DWP director general of the universal credit programme, wrote to the Social Security Committee. He said:
“Regarding rent arrears, many people arrive on Universal Credit with existing arrears and as I explained to the Committee, it is difficult to isolate the affect Universal Credit may be having.”
Mr Couling told the committee that the DWP was undertaking further work on the matter and, in March, the DWP told the House of Commons Work and Pensions Committee that some 76 per cent of universal credit claimants had rent arrears before they went on to universal credit. Yes, there is a rent arrears problem, but it is not clear from the evidence—the minister has talked about the evidence—that universal credit is causing the problem, given that 76 per cent of new claimants are in arrears before they go on to universal credit.