Universal Credit (Wales)

Nia Griffith Excerpts

Tuesday 5th February 2013 Westminster Hall

[Stephen Doughty]

Absolutely, and I will come on to that point in due course.

It is not only those whom I have spoken to who have sincere worries about universal credit. As we have several times seen in the press, one Cabinet Minister has reportedly said in private:

“The information technology for the new system is nowhere near ready. It’s a disaster waiting to happen.”

Who knows whether such rumours are to be believed, but I understand that a number of Cabinet Ministers share that view, which is perhaps one reason for the delays.

What is the specific impact on Wales? Based on an analysis of the December impact assessment and some rough calculations, we estimate that a staggering 140,000 people across Wales might lose £1,600 a year. That is based on an estimate of the Welsh population that will be affected. I would be grateful if the Minister shared the Government’s figures and estimates about how many will be affected in Wales and how much they will lose. Will he provide a breakdown by local authority to help local authorities prepare for the impact of the changes?

Aside from the raw figures, which are shocking in themselves, I want to share the key fears that people have raised with me about the implementation of universal credit in Wales. First, there is the challenge of budgeting for many families; secondly, as my hon. Friend the Member for Newport East (Jessica Morden) mentioned, there is the digital divide; thirdly, there are power relationships within the home; and, finally, there are the risks posed to local authorities, housing associations and other registered social landlords.

First, on budgeting, the Secretary of State for Work and Pensions frequently appears to suggest that those of us who raise the issue are patronising our constituents. Rather than taking so entirely complacent an approach, I commend the work that organisations such as the citizens advice bureaux, the Cardiff and Vale credit union, housing associations—for example, Cadwyn in my constituency—are doing to support tenants by helping them to set up bank accounts, jam jar accounts and similar facilities in credit unions. I also commend the Welsh Government’s work to support those efforts.

Levels of financial literacy––let alone access to a bank account––are not, unlike this measure, universal, and we need to be realistic about the impact of the changes on many people. Rather than making huge assumptions, perhaps the Minister would tell us what risks he sees in relation to the problems in the area and what his Department is doing to assist. I can certainly tell him that many of the organisations that I have mentioned, let alone individual constituents, have experienced varying or little support from his Department, and that relates only to those who are aware of such support.

I want to touch on direct payments and the data from the direct payment pilots that the Department has conducted. A couple of days ago, “Inside Housing” published an article entitled, “Direct payment pilots report increased arrears”, by the journalist Carl Brown, which states:

“Landlords testing direct payment of benefit failed to collect 8 per cent of rent on average in the first four months of the six pilot projects.”

[Nia Griffith (Llanelli) (Lab)]

Will my hon. Friend also ask the Minister what assessment has been made of the effect on local councils of all those arrears, because they will have major cash-flow problems?

[Stephen Doughty]

Indeed, I absolutely agree with my hon. Friend’s point, which I will move on to later.

Mr Brown also stated:

“Data released today by the Department for Work and Pensions showed 6,220 tenants across the UK were paid directly in the first four months of the projects. Of these, 92 per cent of rent was collected on average overall, meaning arrears were around double the normal figure. A total of 316 tenants have been switched back to payment of benefit to the landlord.”

To give a figure that is specific to Wales, in relation to Bron Afon Community Housing and Charter Housing in Torfaen, 535 tenants were involved in the first payments and there have been 59 switchbacks so far, which is about 11%. Those figures are obviously of deep concern and they raise wider issues: there are deep worries about how universal credit will work in practice and about the support provided to people, and there are also major implications for organisations, whether they are local authorities or housing associations, that are supporting those tenants.

Secondly, on the digital divide, my colleague the Welsh Minister for Finance, Jane Hutt, has repeatedly warned that people with few or no IT skills might have difficulty applying for universal credit. In 2010, figures suggested that about a third of adults in Wales did not use the internet regularly, and recent figures from the Office for National Statistics suggest that about 20% have never used it.