Universal Credit and Welfare Reform

Naomi Long Excerpts

Tuesday 11th September 2012 Commons Chamber

[Charlie Elphicke]

Six million second earners will be better off. Importantly, 2.5 million working families will gain in the long run from the introduction of universal credit—again, that is according to IFS figures, not the Government’s figures. The Opposition are normally so keen to use the IFS figures, so it is worth quoting those figures to them and underlining how many people will be better off. That contrasts sharply with the scaremongering that we have heard from the Opposition today.

The other really important thing is that universal credit will help to lift children out of poverty. Universal credit is a transformational change which will affect some 8 million households, and we hope that 900,000 individuals, including more than 350,000 children and more than half a million working-age adults, will be lifted out of poverty as a result. The real question is: why did the previous Government not do it? Why do the Opposition not embrace it and work constructively with the Government on the fine tuning and detailing of this policy to get the best for all our electors, in whichever constituency we represent.

We are also investing an additional £300 million in child care support under universal credit, on top of £2 billion already being spent under the current system. That is worth pointing out, given a lot of the scaremongering we have heard about child care, as it shows the Government’s seriousness about helping out with child care. That will mean that more families than ever before will receive child care support, including 80,000 prevented from doing so by the current hours rule.

Universal credit is the right policy and this is the right time for it. We know that government and IT systems do not make good bedfellows—they do not make happy couples—and that there have been difficulties in the past. However, the previous Government should not judge this Government by their standards, and we should look at the implementation of employment and support allowance, as that was not an IT disaster. The Department for Work and Pensions has a good record, so we should give it the benefit of the doubt. Nevertheless, we should watch carefully to make sure that all goes well and all continues to be moving on time. Universal credit is important because it is very much for the many, with 2.5 million households that will gain. That is an important part of the reform.

Finally, we should trust people. There is too much of a tendency in the House to think that no one can manage, that we have to spoon-feed everyone and that no one can take responsibility. It is assumed that if they find it difficult to take responsibility, they should be spoon-fed rather than encouraged, helped and enabled to take more responsibility for their lives.

[Naomi Long (Belfast East) (Alliance)]

I agree that we want to encourage people to take care of their own affairs, but there is a conflict in that many people do not have the financial capability to do so. The funding for many of the organisations that provide them with advice and support is also under pressure, with the result that they do not have the capacity to support those people through that process. Does not the hon. Gentleman think that this is perhaps not the right time for such an approach and that we need to invest in services to give people financial capability?

[Charlie Elphicke]

Just because they do not have that capability today does not mean that we should write them off for all time. It does not mean that we should be pessimistic or defeatist, as the previous Government too often were.

Let us look at the facts. Some 75% of people in work today are paid monthly and if someone is going to go back into the workplace, they need to get used to monthly payments. When the previous Government moved from weekly to fortnightly payments, all the usual customers, suspects and groups popped up and said that it would be a disaster, but what actually happened? People managed. If we trust people, they often step up to the plate. We need to accept that people are able and responsible and have the ability to be successful in taking responsibility for their lives.

--- Later in debate ---

[Steve Webb]

As the right hon. Gentleman well understands, the impact on every individual will be different, so we have not used a specific figure for the number of hours worked. However, what I have demonstrated is that the people who face the biggest barriers to working more hours will see cuts in their marginal rates and the people who face the biggest barriers to working at all will get more return for working. So this is good news for work incentives. The right hon. Member for Birkenhead referred to the people facing an increase in their marginal rate, but that increase is by four percentage points, from a median of 41 to 45. That is the trade-off. We give people an incentive to take work and we tackle the most severe marginal rates, while some people face a four percentage point increase. That seems to me to be a good trade-off.

Quite properly, a lot of hon. Members raised the issue of internet access. We want to make it absolutely clear that the proposition is digital by default, so if we can get people in on the internet and online, we will do so. However, as the Secretary of State said at the start, we fully recognise that not everybody is online and not everybody will be, so the core planning for the universal credit contains provision for people who will not be online.

Some of the figures we have heard grossly distort the extent to which people of working age in the benefit population are online these days. The evidence suggests that 74% of claimants—not of the whole population, but of claimants—have home broadband and that 41% of claimants do internet banking. To hear the speeches we have heard in this debate, one would not think that these people even knew what a computer looked like. It has been suggested in this debate that we have to avoid patronising people on benefits, and that is absolutely right. We want to support people who are not online—jobcentres will play a part in that and we are talking to local authorities about it—but let us see this as an opportunity to get more people to be internet savvy, online and more employable. Let us not condemn people; let us give them opportunities and training.

The impact of this measure is very important, and the hon. Member for Stretford and Urmston (Kate Green) asked about the equalities impact. We will publish an updated equalities impact assessment with the final regulations after the autumn statement.

The hon. Member for Glasgow North East (Mr Bain) gave some bizarre figures about the impact of this reform on lone parents, and I do not know where he got them from. Lone parents gain from universal credit: 400,000 lone parents who rent will gain, as opposed to 200,000 who will have lower entitlement; there will be twice as many gainers as losers in that category. This reform will reduce child poverty, because we are spending huge sums of additional money at a time when money is tight. We are doing so because of our priority of making work pay.

We have heard discussion of the real-time information system, the fact that people’s benefit will be based on their current situation and the impact on business. This approach has been assessed as saving businesses £300 million a year. Those figures are signed off not by us, but by the Regulatory Policy Committee, which is a business-led organisation; they have been validated by business. Businesses are doing a lot of these calculations anyway, with the software doing it for them in most cases, but the streamlining of the system will save businesses cost overall. We are working closely with our colleagues at Her Majesty’s Revenue and Customs; there has been close working between the two Departments. The Department for Work and Pensions is represented in the governance of HMRC’s real-time information programme at every level, and the DWP and HMRC have jointly presented to Parliament.

The right hon. Member for Birkenhead, in another bizarre, overstated allegation, said that there has been a mass exodus of senior civil servants on the programme. That is completely untrue. The senior responsible officer, Terry Moran, whom he will know from years gone by, has held that role since November 2010. The programme director has been in place since August 2011. At HMRC, the senior responsible officer for the real-time information service has retired—we still allow people to retire, even under our policies—but has been replaced by someone from the DWP. So the suggestion that people are just walking out the door is nonsense and is scaremongering.

[Naomi Long]

rose—

[Steve Webb]

I have got only two minutes, so I had better not give way.

We were asked about the position on domestic violence, an important issue raised by my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood). It is an important issue in respect of provision for splitting payments, for example. The Government are absolutely committed to protecting those who are subject to domestic violence. For example, under universal credit, victims of domestic violence will be exempt from things such as work search requirements for a three-month period. Although shared payments would normally be appropriate, because we know that most households budget together, clearly we will make alternative arrangements in exceptional cases. We have therefore retained powers to split payments between members of a couple, for example, in cases of domestic violence. Details of those exemptions will be included in guidance.

We heard a large number of contributions and I cannot do justice to them all, but the key theme from Government Members has been a unified view that we must make work pay and that we should not listen to the naysayers. Frankly, it is always possible to get a newspaper headline by saying “Big Government IT project bound not to work”, because if it does work nobody will ever remember. That is always the way in which the Opposition conduct themselves, but we are in the business of making things happen. When my right hon. Friend the Secretary of State explained how closely he monitors the programme, he was not exaggerating. This project has probably had more hours of testing, evolution and making things work than any other with which I have been associated.

The hon. Member for Makerfield (Yvonne Fovargue) mentioned the 1988 benefit changes, which were a “big bang” change. Income support, supplementary benefit, family credit, the family income supplement and housing benefit were reformed all on a single day. This is a roll out over four to five years and we will get it right by doing it gradually, testing it, having pathfinders and bringing in groups one step at a time. We all saw what happened under the previous Government to the tax credit system when the changes were done in a “big bang”, but we will make this change gradually, get it right and make work pay, so we should reject the naysayers and reject the motion.

Question put.

The House proceeded to a Division.