Meeting of the Parliament 23 April 2019
I begin by thanking the committee clerks and all those who gave evidence to the inquiry.
Although I dissented from a number of points and conclusions during the finalisation of the committee’s report—for reasons that I will return to—I acknowledge that this was an important inquiry because recognising that in-work poverty is a problem and committing to tackling it is the first step towards ensuring that everyone who works can and should expect a better future.
Last year, in its report “UK Poverty: causes, costs and solutions”, the Joseph Rowntree Foundation stated:
“The processes that cause poverty are complex. Simplistic explanations may focus on one factor ... but solving poverty requires an approach that takes into account the impact of market and state structures—as well as of individual choice.”
It is important to acknowledge that the inquiry focused on one factor and, in doing so, has inherent weaknesses.
As part of its welfare reforms, the UK Government has committed to ensuring that work pays. The introduction of universal credit was at the centre of that reform, with the aim of simplifying the benefits system and ensuring that individuals and families were able to escape the legacy of benefits that trapped households into intergenerational worklessness. That legacy saw the breakdown of the social contract between taxpayers and those who needed support and the stigmatisation of those who were on benefits, which I hope we never see again.
We know from Scottish Government figures that, between 2015 and 2018, 60 per cent of working-age adults who were considered to be in relative poverty were in working households, with the figure rising to 65 per cent, or 160,000 individuals, in the case of children. We also know that projections suggest that overall poverty rates are likely to rise over the next few years.
What is the relationship between in-work poverty and universal credit? David Finch of the Resolution Foundation said:
“It is definitely too early to say that universal credit is having an impact on the poverty figures, especially because it was nowhere near being rolled out to everybody”
when the Foundation’s survey was done, and
“it still is nowhere near being rolled out to everybody—so it will take time before we see the impact.”
Russell Gunson of the Institute for Public Policy Research Scotland acknowledged that
“universal credit and social security more generally have a big role to play in reducing and tackling poverty and in-work poverty. The economy and the income structure in Scotland—and, of course, the United Kingdom—will be as much, if not more, of an issue when tackling in-work poverty.”
Nobody disputes that universal credit has had its problems, particularly in the early days following its introduction, but Robert Joyce from the Institute for Fiscal Studies reminded us in his evidence that
“The overall rise in the proportion of people who are in poverty and are in a working household has been going on for some time. In itself, it is not a phenomenon that is related to universal credit.”
More importantly, he stated:
“A significant group of working households will keep more benefits under universal credit than they would have kept under the old system. In that direct sense, universal credit will top up and increase their incomes, which would tend to reduce in-work poverty.”—[Official Report, Social Security Committee, 13 September 2018; c 7, 5, 6.]
Part of the challenge for the committee was the fact that the roll-out of universal credit full service was under way during the inquiry and was only completed in December 2018.