Universal Credit (Work-Related Requirements) In Work Pilot Scheme and Amendment Regulations 2015

Lord German Excerpts

Thursday 22nd January 2015 Grand Committee

[Lord Farmer (Con)]

My Lords, rolling out universal credit and optimising such a colossal and innovative system without an iterative process of trial and error should be inconceivable. I am grateful for the opportunity to discuss these regulations because I see them as a sign of a fresh wind blowing through large-scale publicly funded social policy projects, which is an unapologetically experimental approach, as the Minister said, in the most robust sense of the word.

I also understand a randomised control trial methodology is to be implemented, as the Minister said, and it is the gold standard when it comes to experimental design. I am not a social scientist: I am a businessman and conscious that writers such as Jim Manzi, as has been mentioned, have been taking my world by storm by insisting that leaders there can and should use what he refers to as RCT experiments to test decisions in a controlled, low-risk environment before committing their firms and shareholders to large-scale and expensive changes.

We owe it to the people who are the subjects of similarly large-scale social programmes and the taxpayers who fund them to test what we think will work best and learn from that process whether they are in fact being aided effectively and cost-effectively. Both are important.

The Washington State Institute of Public Policy has led the world by raising the bar for policy development in this regard. All sorts of approaches might make a little difference but let us sink our resource into the ones that will help people make the most progress. Honing the many facets of the most effective approach requires the iterative and flexible piloting legislated for in Section 41 of the Welfare Reform Act on which these regulations are based.

As one who is used to having a free hand when it comes to undertaking the necessary fact-finding and research prior to investing my own and my clients’ money, I want to emphasise how innovative and important this flexibility is. As we have heard, static trials have been the standard fare of DWP research contracts but the Minister has already made clear how innovative the proposed assistance is. We have to roll out in-work support that ultimately could help hundreds of thousands to escape a low-income existence while, at the same time, testing and adjusting the assumptions different forms of support are resting on for a wide range of diverse people.

Moreover, it is my understanding that the DWP expects about 1 million universal credit claimants to fall within the “working but could do more” category. If the department wants to help such an enormous and diverse cohort effectively, it seems entirely appropriate that a flexible research model is adopted.

However, I have some questions. First, what does the 1 million figure represent as a percentage of all universal credit claimants and what benefits in terms of cost savings might there be to the country if people can be consistently helped to overcome barriers to raise their wages? In other words, what is the great prize that these trials can place within our reach?

Secondly, I am pleased to learn from the September 2014 minutes of the Social Security Advisory Committee that detailed guidance will be given to work coaches on the pilot, so that anyone randomly chosen to take part in this test-and-learn approach who is deliberately working fewer than full-time hours in order to get a business off the ground will not be forced to take part. A research agenda must not become the tail that wags the dog. Forcing someone to accept help to build up their hours when they are already taking steps to improve their circumstances and possibly even to employ others would be a perverse use of public time and money. It would also undermine the purpose of the trial.

Obviously, there need to be two-way safeguards. Selected claimants may be particularly concerned about complying with all the requirements placed on them under universal credit, not least to avoid sanctions, as they may be in a financially precarious position. They may not realise that there are exempted categories in the guidance. Will the Minister give an assurance that all people who are chosen for trials will be made fully aware of the characteristics, including permanent disability, that mean that their involvement is not mandatory? Given the lack of public and media awareness of exemption for many disabled people from the withdrawal of the spare-room subsidy through the use of discretionary housing payments, I suggest that all effort is made to make this clear from the outset, to avoid much worry and the proliferation of misinformation.

Thirdly, although my head believes that flexibility is indispensable, in my heart I worry a little about the power over claimants’ lives that these regulations are giving to researchers. The Minister mentioned tailoring and tweaking. The 21st report from the Secondary Legislation Scrutiny Committee referred to the very broad nature of the powers permitted by this instrument and raised similar concerns to mine over the transparency of research design and process. Will the Minister say how we will know when researchers have made modifications to these? As the Secondary Legislation Scrutiny Committee also asked, what controls will exist on the extent of these trials?

Finally, my wholehearted support is behind this Government’s ambition to help a million universal credit claimants to increase their earnings, but is the money to embark on this vast exercise in the departmental business plan for universal credit?

[Lord German (LD)]

My Lords, I start by thanking the Minister for giving us an update on where we are with universal credit—27,000 people and 100 jobcentres. I wonder whether I can tempt him to tell us where we might be by the end of April, for example, with the number of people who are receiving universal credit and the number of jobcentres that are supplying it. It is important to note what progress we are seeing.

In-work progression, which is the target that this pilot and these regulations are trying to attach themselves to, is one of the challenges of the next five years. I believe that we will find that this area requires a great deal of attention. It is an issue that relates to a drop in unemployment, so we have to make sure that those who are in employment are given the best possible hand-up and help. I could not help having a wry smile when my noble friend referred to the way in which DWP does this sort of trialling, saying that it was unique and distinctive. I congratulate him on that because we need to find out how universal credit has been doing. As you find out, you adjust, you change and you move on, rather than having a simple blanket approach, which is a recipe for difficulties in the future.

However, there are issues, and I welcome the comments of the noble Lord, Lord Farmer. I particularly welcome what he said about the wind of change. I wonder whether this is a sign of Harold Macmillan coming back to see us again and a revitalised way of looking at social policy. I raise that as an interesting point.

Universal Credit

Lord German Excerpts

Monday 24th November 2014 Lords Chamber

[Lord Freud]

We have put out some statistics on the level of housing arrears, which show that, right at the start, 16% of people were in arrears. That compares with 7% for JSA equivalents. In the second wave of research, that 16% figure had come down to 12%. We have put in a lot of measures to ensure that we get that figure right down and give people the support that they need to manage their finances.

[Lord German (LD)]

My Lords, universal credit is paid monthly and usually includes rent, which is quite a substantial slab of money. Can my noble friend tell us what progress he has made with the banks and credit unions to ensure that transactional bank accounts are available to people, so that they may take advantage of direct debits and standing orders?

[Lord Freud]

We have a very active programme working with the banks to ensure that they provide services for the clients who are on universal credit. An exercise is currently going through to expand the ability of credit unions to provide these kinds of facilities by giving them a common banking platform.

Jobseeker’s Allowance (18–21 Work Skills Pilot Scheme) Regulations 2014

Lord German Excerpts

Wednesday 19th November 2014 Grand Committee

We believe that the measures proposed in these regulations will give the young people who participate in the pilots a real opportunity to enhance their skills, gain experience of work, and pull themselves out of the benefit trap and into sustained employment. It will also give us the opportunity to further refine the support we give to young people. Nowhere else in the OECD is such a systematic approach being taken to address the literacy and numeracy needs of welfare claimants; in this we will be an exemplar. These pilots offer the potential to impact the lives of thousands of future claimants who will benefit from the insights gained, enabling them to avoid the scarring effects of unemployment and to build better futures for themselves and their families. I beg to move.

[Lord German (LD)]

My Lords, I am grateful to the Secondary Legislation Scrutiny Committee for drawing this matter to the attention of the Committee because it raises issues of public policy that are of some significance. As my noble friend has said, this policy seeks to deal with a difficult group of young people. It is an issue which has stubbornly refused to go away despite the many different approaches that have been taken to it. I must say that I agree with the definition of the problem, but I am not yet convinced that the solutions being proposed in these regulations are the right way to progress our knowledge, understanding and prescription for dealing with it.

At paragraph 7.4 of the Explanatory Memorandum the Government say that,

“there is no clear evidence of what methods would be most effective in improving the skills or enhancing the work experience of young unemployed people. For this reason, we wish to pilot the use of innovative approaches”.

I agree entirely with that, although there is a large body of research on the way in which these innovative approaches with young unemployed people can work. I must tell my noble friend that I am not convinced that what is proposed here will be successful—that is, the new approaches to tackle poor English and maths skills among 18 to 21 year-olds and the tests that my noble friend has described. The key word in all this is “innovation”. Innovation means something new, a new approach and doing things in a different way. The two approaches described in the regulations are a classroom-based activity and an online-based activity. They set out where the activities take place and what activities take place rather than the process of dealing with this very difficult group of young people.

Most of the academic research on this issue says that the two crucial issues you have to deal with are lack of self-esteem and lack of confidence. The early steps on the rungs of the ladder they have to climb to achieve qualifications are missing. The group of people we are talking about have probably failed at school. They have been absent a great deal and have not even sat some of the examinations at the end of their schooling. The big question is this: if these young people have failed at school, and school is mandatory, what will the innovative approach in these regulations and the pilot achieve?

Research on this issue and my practical experience indicate that you have to spend considerable time supporting these people outside the classroom environment in order to restore their self-esteem and confidence. To achieve an examination result, you need to improve their self-reliance, and self-reliance does not come simply from following a course or a training programme, no matter how it is constructed. Although the activities in the report of the Secondary Legislation Scrutiny Committee—the DWP was asked to provide a list of all the activities—such as webinars, group sessions, “Telekids”, learning groups and online chat rooms are very straightforward, they do not deal with the crucial problem of improving self-reliance and esteem, which requires personal support.

As a patron of a charity working with a large, modern high school where a large number of young people were failing in the way I have described, my experience is that taking them out of school activities and giving them lessons associated with the charity resulted in most of them gaining some GCSE qualifications and a portion of them eventually going on to further and higher education at the end of the two-year period. That was a big success story, but its success depended on the relationship with the trainers in the non-formalised activity. In order for this activity to work, it had to be different from activity undertaken in school. Therefore, I must ask my noble friend what is in these regulations that will convince me and other noble Lords that the approach is innovative and has not been tried before. What academic research has been taken into account in trying to understand how these problems are dealt with in our country?

My only other question is why this pilot is being undertaken in England alone. I suppose—this may presuppose what my noble friend will announce—that it is because the tools by which you might handle this, such as the training and formal education systems, are in the hands of devolved government. If you found an innovative approach that worked, the question would remain how you could undertake it in all parts of the United Kingdom. You would have to convince the devolved Administrations to work with it.

The relationship with the education, training, social and support sectors of our society are crucial to this. Can my noble friend tell us what level of activity there will be with local communities because that is necessary to creating the innovative changes that are crucial to resolving quite considerably this very stubborn problem?

Underoccupancy Charge: Carers

Lord German Excerpts

Monday 10th November 2014 Lords Chamber

[Lord Freud]

We clearly value carers greatly, and we have put support into the system at different levels for them. In this case we have given local authorities some guidance to make it absolutely clear that they can make longer-term determinations of discretionary housing payments. We have also made it clear that DHPs will be paid next year as well as this year.

[Lord German (LD)]

My Lords, the Government’s own review of the spare room subsidy shows that discretionary housing payments are inconsistent, short-term and temporary. Indeed, the evidence is that most of the applications for those payments are made by the very groups who should be exempt—carers and those who have had adaptations made to their homes. Many local authorities are now means-testing the disability benefits of people in receipt of those allowances. Regardless of what may happen to this policy next year, is it not now time for the Government to fully exempt people in those groups, such as carers and those with adapted homes, so that they are not subject to this inconsistent approach to government funding and can get certainty in their lives?

[Lord Freud]

As I said, we have made sure that long-term discretionary housing payments can be made. We have also provided guidance to make it clear that where claimants are using their disability payments for needs caused by their disability, such as paying for care or Motability schemes, those would not be included in the calculation.

Work Capability Assessment

Lord German Excerpts

Wednesday 5th November 2014 Lords Chamber

[Lord Freud]

The service that we provided is not where we want it to be—we have been clear about that. We are pulling down the backlog; it is down by 20% since February. We announced in March that Atos would be leaving the contract, and we were able to announce last week that Maximus Health and Human Services is taking it up from that date.

[Lord German (LD)]

My Lords, we now have a new supplier of these work capability assessments. Most of the staff are being transferred using the transfer of undertakings. May I and the House be reassured that the transfer of undertakings will not include a transfer of working practices? In particular, perhaps my noble friend can tell us whether he agrees with the recommendation from the Government’s own assessor of this policy, Dr Litchfield, that less emphasis should be placed on the number of points attained in the test and that the calculation should be used,

“simply to determine whether the threshold for benefit has been reached”.

Surely that is a much fairer way of doing these assessments. Does the Minister agree?

[Lord Freud]

We are not changing the actual assessments, but we are improving the quality of those assessments; expanding the number of medical professionals, particularly in mental health; understanding how fluctuating conditions work, and so on.

Employment

Lord German Excerpts

Thursday 23rd October 2014 Lords Chamber

[Lord Freud]

As the noble Lord knows, that is an extraordinarily complicated economic question. The Chancellor has clarified that the target around full employment is a better employment rate than other countries are seeing. We are currently not far off the full employment rate, at 73%, that we have seen in the past.

[Lord German (LD)]

My Lords, as the unemployment levels fall, the focus naturally shifts towards in-work progression, with people wanting to earn more money and have more hours. Can my noble friend tell me whether we should in fact incentivise the Work Programme so that after someone being 26 weeks in work, when a company gets paid, there should be further incentives to help people earn more money and get more hours, so we can move people into better work in their lifetime?

[Lord Freud]

My Lords, we now have the real-time information system working, whereby we know what people are paid every month. That gives us a new opportunity with the Work Programme in its next stages to look not just at sustainment in work, which was the key new feature of the original Work Programme, but at progression in work. It will be entirely possible to devise ways to encourage providers to help people make that important progression.

Universal Credit

Lord German Excerpts

Wednesday 30th July 2014 Lords Chamber

[Lord Freud]

I do not have a review of all the business cases, but I know that we have 44 separate business cases for change programmes in my department, the DWP, and that this is the most reviewed. What we have said—and I have said it in this House—is that the plans in the strategic outline business case for the remainder of this Parliament have been cleared, and that we are looking to get formal full clearance for the case shortly.

[Lord German (LD)]

My Lords, the universal credit is providing great opportunity for people and is being rolled out slowly. It is also giving Jobcentre Plus advisers an opportunity, for the first time, to advise customers so that they get comprehensive support. Most of the problems seem to be about the future. Can my noble friend therefore reassure the House that it will be rolled out to and engage a large number of people by May 2015? What milestones does he anticipate we will have passed by the time that we get to May 2015?

[Lord Freud]

My Lords, we are rolling out universal credit on a careful basis right the way through the north-west. We are currently at 38 jobcentres across the country, the bulk of which—32—are in the north-west. On Monday we moved from singles to couples as well, and that will be introduced right the way through the north-west as we finish this rollout this year. In the autumn we will move to families; so there will be a substantial number as we do that rollout. I must emphasise that we are not doing this rollout in the same way as past programmes have been brought in, on a big-bang basis; we are making sure that we understand what is happening and we go at the pace at which we can do it safely.

Jobseeker’s Allowance

Lord German Excerpts

Monday 21st July 2014 Lords Chamber

[Lord Freud]

Since 2010, 1.8 million people have got jobs. Nearly 80% of that growth was outside London, with all regions being up in that period. As for the role of benefit reforms in our economic recovery, my view—this is something that statisticians will work on for some time—is that we are beginning to move into some of the structural problems that we have had for many years now, and are moving through the cyclical effects into those structural requirements.

[Lord German (LD)]

My Lords, the jobseeker’s allowance is being subsumed into universal credit. Universal credit is being moved along and rolled out slowly; it is much better to get it right than hastily to put something in place that goes wrong. However, it is having a significant impact on the number of people who are being helped and getting into work. Will my noble friend help the House by identifying what the impact would be of the Labour Party’s proposal to hold up and stop the rollout of universal credit on those who are seeking jobs in this country and those who are getting help from joining universal credit?

[Lord Freud]

I think it would be pointless to slow down universal credit, which is now rolling out smoothly. This year, we are rolling it out right the way through the north-west, moving through couples and families. Any delay to that process withdraws support from the people who need it. We have, however, rolled out the claimant commitment, which is part of universal credit, right through the country. The whole drive of that reform is to help and coach people into work, and that seems to be having a good effect.

Benefit Cap

Lord German Excerpts

Wednesday 2nd July 2014 Lords Chamber

[Lord Freud]

There are two ways in which the cap works to incentivise people to go to work. One is that people who qualify for working tax credit are exempt from it, but there is another way, in that anyone doing even small amounts of work will be capped by a lesser amount because it serves to reduce the level of the cap and effectively allows them to keep their earnings. Clearly, one always has to be very careful to distinguish causation from correlation, but in a survey conducted by MORI a quarter of capped claimants said that they had looked for work because of the cap and 45% said that they would look for work in the next 12 months because of it.

[Lord German (LD)]

My Lords, the dignity of work is probably the best way in which people can escape from the cap. However, the figures to which my noble friend has just referred indicate only a trend in the direction of travel. From the figures which the DWP is now collecting, will the Minister have formed a view by the end of this coming recess as to the whole period? Will he know many people have moved into work and whether the trend that we have seen in the initial figures has been carried through, so that we can say that this initiative has really borne fruit into work?

[Lord Freud]

The cap is doing quite a lot of things. It has an influence on the people who are capped but it also sends out a message. The total number of people who have been capped at one time or another stands at just over 42,000; the current number is just over 27,000. A substantial proportion of those who have moved out of the cap, which they might do for various reasons, have gone into work and taken working tax credit. Others will have taken advantage of the effect that I have just referred to, whereby doing even small amounts of work reduces their cap.

Housing: Underoccupancy Charge

Lord German Excerpts

Tuesday 24th June 2014 Lords Chamber

[Lord Freud]

My Lords, some of my more sharp-eyed colleagues here will have seen the information we put out on the discretionary housing payments for last year. That showed that there was a £13 million underspend by 240 councils and that of the £20 million bidding fund, £7 million was not spent. The £20 million was not applied for in its entirety. However, we allocated that money on the basis of parity of requirement. There was an extensive process to make sure that we gave the appropriate amounts of money to those councils.

[Lord German (LD)]

My Lords, the Ipsos MORI review, of course, is much awaited, not least by the Master of the Rolls who, in making a judgment in favour of the Government, said that the DWP had informed him that,

“the scheme may need to be modified in the light of experience”.

When the independent review comes out and my noble friend sees it before the Summer Recess, will he agree to act upon it and take decisions to make changes to the scheme so that it fits the experience shown by his independent review?

[Lord Freud]

My Lords, we always look very closely at any research that is done and we will do no differently with this research.