Universal Credit and Working Tax Credit

Nigel Evans Excerpts

Monday 18th January 2021 Commons Chamber

[Mr Deputy Speaker (Mr Nigel Evans)]

I advise the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

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[Jonathan Reynolds]

We believe that this uplift should stay in place during the crisis, and I do not think anyone believes that the crisis will end in April. I will make some points about long-term proposals near the end of my speech, as well as about why the whole system requires much more considerable reform than just tinkering around with the core amount.

The cost of paying for all this is significant: around £6 billion. That would vary depending on the levels of unemployment throughout the year, but any measure right now that cuts public spending or raises taxes in the middle of the biggest economic downturn for 300 years would be the wrong policy. Decisions will have to be made as we get into the middle of this decade to address the levels of debt that have been accrued by the Government during this crisis, but that is not the right choice now.

I want to focus on the point raised by the hon. Member for Sevenoaks (Laura Trott), because if the Government are seriously thinking about economic recovery, cutting universal credit is like pulling the rug from under the economy’s feet. This £20 a week is not saved by families; it is spent in shops and businesses across the country, stimulating the economy. We all agree that this pandemic and the unemployment crisis will not be over by April this year, and whatever protestations we have heard on social media or in the press—and, frankly, however people vote today—I know that there are many people on the Government Benches who agree with this case. The former Secretary of State for Work and Pensions, the right hon. Member for Preseli Pembrokeshire (Stephen Crabb), recently said:

“Withdrawing the uplift would reduce the spending power of people on lowest incomes. This will likely reduce consumption, meaning families going without essentials and household debts rising. It would also see a reduction in spending just when the economy needs it most.”

I could not agree more with that assessment. He is also right to draw attention to the levels of personal debt for some households.

As well as the real value of benefits being historically low as we went into this crisis, the pandemic has meant very real additional costs for most families. There are more meals for people to cook at home, and more days to heat their house. People have devices and lights on at times they would not normally, and have to buy what they need to teach their children at home. The clinically vulnerable have been forced to buy food locally, at a higher cost than in larger supermarkets. Everyone has experienced the pandemic differently, but for some the costs have piled on.

Citizens Advice told me this week that three quarters of the people it helps with debt who currently receive universal credit and working tax credit would have a negative budget if the £20 was cut. That means that they will have less money coming in than going out, and will not be able to cover basic essentials such as food or heating—and it will come at a time when one in three households has lost income because of covid, and 7.3 million people are behind on their bills.

The proposed cut to universal credit and working tax credit is not the only issue causing consternation in the country right now. I would particularly highlight the continuing injustice for those people on employment and support allowance and jobseeker’s allowance, who did not even get the uplift to begin with. That is unjustifiable and discriminatory, and I ask the Minister if he would mind specifically referencing that point in his speech. Reversing the April cut to universal credit is a specific, clear and unavoidable decision that needs to be taken, which is why it is right that we are bringing it to Parliament today.

Some of the speeches that we will hear today will no doubt say that we should focus on jobs and getting people back to work, and not on social security. The Prime Minister said something along these lines at the Liaison Committee last week, but Members will know that universal credit is an in-work as well as an out-of-work benefit—40% of universal credit claimants are in work—so that argument does not work at all. To be frank, it would be helpful if someone told the Prime Minister that. Universal credit is also means-tested, so if people go back to work and do not qualify for it, they will not receive it at all. If we want to have a serious discussion about boosting employment and making work pay, let us discuss work allowances, the taper rate and deductions, but let not the Government try to use that as an excuse to do the wrong thing on this cut.

Others might say that support should be more targeted and the basic allowance is the wrong element to target. In that case, the Government would, logically, scrap the two-child limit or the benefit cap, which disproportionately affect people in the most difficulty—larger families in areas with higher housing costs. However, when we put that forward, it, too, was rejected.

Finally, there has been a proposal for a one-off payment to compensate people affected by this cut. That is an awful idea. It does not address the real-terms reduction in support, just as unemployment is expected to peak. More than that, although 6 million families are affected by this now, that cohort will change in composition throughout the year. A one-off payment based on who is eligible now will fail to support some of the people who need that help the most. So please, Minister, ask the Chancellor to think that one through again.

I know it sometimes frustrates Conservative Members that we are still determined to replace UC altogether—I was asked that question earlier—but I say to them that, if they will not listen to those on the Opposition Front Bench, they should read the work of the cross-party Select Committee on Work and Pensions and read the report of the cross-party House of Lords Economic Affairs Committee, which is chaired by Lord Forsyth. They are clear and robust in highlighting the fundamental problems that currently exist: the five-week wait; the two-child limit; the erratic assessment period; the problems with paying for childcare in arrears; and the shocking design that means that many disabled people are worse off on UC. The last one of those is very personal to me and it simply is not right not to replicate how the severe disability premium worked under the previous arrangements. All this means that UC’s brand is severely tarnished. If everything was working as well as Ministers sometimes say, would we really be a country where food banks have gone from being a niche form of support, mainly for those without recourse to public funds, to a mainstream and essential method of keeping people fed? Would we have had the fundamental increase in child poverty, which is getting bigger with every year of Conservative government? Those questions deserve answers.

Throughout the crisis, the Government have often been behind the curve, never out in front, and they have left some decisions, such as on furlough extension, to the very last minute, in a reckless game of brinkmanship. That is heavily why we have, tragically, the highest death toll in Europe and the biggest economic downturn of any major economy. Let us not repeat that with this decision. We all know that families are looking at us, wondering what we will do to help make getting through this crisis just that bit easier. What they do not expect is the Government making it even harder. I hope that one thing we can all agree on is that the crisis has shone a light on some of the problems in the UK, problems that have made tackling the pandemic harder and provoked a discussion about what kind of society we want to rebuild when the pandemic is over.

If the ambition of Conservatives really is to level up the UK, it is hard to see how they can support a cut that would be so regressive to low-income families and which disproportionately affects the places the Government say they want to help. I am talking about families such Bethany and her child in Blackpool. She said to me, “I was made redundant due to coronavirus. As a single parent to a one-year-old, universal credit is now the only income I receive. If the Government does cut £20 a week, I will become one of the statistics needing to use a food bank. It devastates me to think that I will not be able to provide for my child should this decision be finalised.” Margaret, who has been volunteering at a food bank in Luton, says, “A young man came in for a food parcel. He looked thin and his face was grey. He sat down and he said that he thought he could last with no food until the universal credit came through, but he found that he couldn’t. He’d come in on a Wednesday and his universal credit was due on the Friday.” That is the reality before the cut has gone ahead. My inbox is full of personal accounts such as those. I urge every Member to look at what is in their inbox, read about the human cost of what it will be like for people if this cut goes ahead, address the worries people have about not being able to put food on the table, and think long and hard about the uncertainty and fear that all families face after 10 long, hard months of this pandemic.

I want to make a special appeal to the new MPs on the Conservative Benches whose constituents elected them in good faith for the first time in 2019. Many of those people are the first Conservative to ever be elected to those places. They have already made history and their success is a significant personal achievement. They will be remembered, but so will their votes. Most of all, when thinking about how to cast their vote today, I urge everyone to take a moment to reflect on what this cut will mean to the people who send us here: the uncertainty it will add in an already uncertain time; the loss it will bring when we have already lost so much; the fear it will cause when what people need is hope. So, for our constituents, for the economy and for the national interest, we need to cancel this cut and I ask every Member of the House today to support our motion to do so.

[Mr Deputy Speaker (Mr Nigel Evans)]

Before I call the Minister, I have three points to make. As people in the Chamber can see on the annunciator—I am not sure whether people can see it at home—there is a three-minute limit on Back-Bench contributions. For those who are contributing outside the Chamber, there is a timing clock, which you should be able to see on the bottom right hand corner of whatever device you are using. It would be a lot cleaner if Members could bring their contributions to a close before the three-minute limit is up, otherwise you will be interrupted by the Chair. For the convenience of everyone as well, the question will be put at 7.15 before we move on to the next business.

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[Will Quince]

I thank the right hon. Gentleman for his intervention, but I do not think anybody is saying that. We are saying that the situation remains unclear, so the Chancellor of the Exchequer in particular needs the agility to be able to act on the information at the time.

My right hon. Friend the Chancellor has an unenviable task, but I repeat the point that I made just a moment ago: he has a proven track record of stepping up to support the poorest and the most vulnerable and disadvantaged throughout this pandemic, and I have absolutely no doubt that he will continue to do so. Throughout this pandemic, the Chancellor has consistently acted with the necessary agility to support and wrap our arms around those who need it. The Chancellor has always said that, sadly, we cannot save every job or every business. That is why getting Britain back to work is the relentless focus of the Secretary of State, myself and the entire ministerial team at the Department for Work and Pensions. That is key to our national recovery and is why we are investing billions of pounds to secure the economic recovery. Through our plan for jobs we are injecting billions of pounds-worth of support and have launched a range of employment schemes and programmes.

To conclude, we have demonstrated during the pandemic that this Government are committed to supporting the most vulnerable in our society and to ensuring that people have the right level of support. Through universal credit and our plan for jobs, we are supporting people of all ages to gain the right skills and experience to support them back to work. We know how quickly things can change with this virus—the new variant has led to increased challenges—but there is now also real hope from the rapid vaccine roll-out, which promises to have a hugely positive impact on the way ahead and the effort to get back to normal and to get our economy growing again. As the Government have done throughout this crisis, we will continue to look carefully at the changing impact of the virus on public health and on our economy, to help to inform how we can continue to support people and give them the tools that they need to move into the workplace so that the country can build back better after the pandemic.

[Mr Deputy Speaker (Mr Nigel Evans)]

For the avoidance of doubt, the Minister has not moved the selected amendment. The question before the House remains that already proposed, as on the Order Paper.

[Neil Gray (Airdrie and Shotts) (SNP) [V]]

I am pleased to have the opportunity to go into detail about why the SNP has been at the forefront of the campaign, led by the likes of the Joseph Rowntree Foundation, Save the Children and others, to keep the £20-per-week uplift to universal credit and extend it to legacy benefits.

I commend the UK Government for taking the action that they did to uplift universal credit by £20 per week. It has undoubtedly been an important step in protecting some—but not all—social security recipients, who otherwise would have fallen either into poverty or deeper into poverty during this pandemic. It was the right thing to do and it is right that it is now kept. Indeed:

“The universal credit uplift should continue for the foreseeable future. I would encourage the UK Government to make that commitment now and provide the reassurance many people are looking for.”

Those are not my words, but those of the hon. Member for Moray (Douglas Ross), leader of the Tories in Scotland, back in October.

What has changed since October? Both the health and the economic aspects of the pandemic have got worse. The need is still there, and I will tell the House part of the reason why. This is where I have to take slight exception to the Labour Opposition motion. It says that they want the UK Government to

“give certainty today to the six million families for whom it is worth an extra £1,000 a year.”

Although I support the motion, the uplift is worth a thousand pounds per year extra only if taken in isolation; actually, the Joseph Rowntree Foundation has calculated that, if we look at cuts to social security since 2010, even with the £20 uplift, families unable to find work will receive, on average, £1,600 less per year in social security support than they would have done in 2011. That is even with the uplift. Those with children will receive £2,900 less. The contrast is even more stark for larger families with three or more children, who will lose £5,500 each year. That is part of the reason why this initiative is so important.

The UK Government seem intent on cutting the temporary uplift at the end of March, meaning that families will be a further £1,000 per year worse off. That would give the UK Government an unenviable record: if they go ahead with this cut, they will be responsible for cutting out-of-work support to its lowest level since 1992 and its lowest ever level relative to average earnings.Social security spending is normally counter-cyclical, so expenditure automatically rises during an economic downturn while revenue from taxation falls. This Government are trying to cut support during an economic downturn, when more people need greater support.

Let us remember what that means to the people who need the support: the 6 million households, in every constituency in the UK, but also the millions more on legacy benefits—disproportionately sick and disabled people—who have been cruelly denied the uplift. Last week I chaired an evidence session of the all-party parliamentary group on poverty, which I co-chair with the hon. Member for Thirsk and Malton (Kevin Hollinrake). We heard powerful testimony from two women on legacy benefits who have not benefited from the uplift. I want to read some of what Michelle told us, because it should be heard today by colleagues across the House and Ministers on the Treasury Bench, especially the Chancellor. It should be heard because when she spoke, Michelle had millions of others behind her in the same position.

“My name is Michelle and I am currently a single parent to 2 children aged 12 and 7. I have been in receipt of legacy benefits for 7 years. Prior to this I was a working woman with a career in finance, a tax payer. Due to my health issues I currently receive the legacy benefits of income-based employment and support allowance, child tax credit and of course child benefit. April 2020 saw a rise of 1.7% to legacy benefits.

Living on social security is incredibly challenging for families; it provides less than minimum expectations of living. During the pandemic those challenges have been magnified with social restrictions and home schooling. £20 sounds so little but it means so very much. I became interested in why we had not received it.

In November of 2020 I emailed my...MP about the £20 uplift and legacy benefits, she in turn enquired with the Department of Work and Pensions about the situation. I was pleased to have received a response from both, but still somewhat downhearted at how little they understood the situation.

The main recommendation from my MP and the DWP was to consider applying for Universal Credit at this time to obtain the £20 uplift. Is the suggestion that people on legacy benefits request to be migrated to Universal Credit a feasible option you might ask? For me, to risk weeks of zero income for my family would be totally impossible and have knock-on effects of missed bills and potentially surviving on whatever charity we have not already exhausted. I cannot, as a responsible mother, take that risk.

I was also informed by my MP that ‘those on legacy benefits may have benefitted from other support such as mortgage holidays and income protection schemes’. She also mentioned increases to housing allowance. I am eligible for none of these and have no options to move home—I do not qualify for a council house despite being in an overcrowded home in poor repair that I can barely afford. I cannot afford to rent nor would I likely be accepted. These suggestions are not a solution to the problems we face.

As it stands, being prohibited from accessing the £20 uplift pushes me further into using credit for everyday expenses such as the weekly food shop and utilities. Therefore I pay interest on food, heat, water, light, shoes.

So what would £20 a week, equivalent to just under a...month of benefits which I calculate at £1,040 in total (over 10% of my income), mean to my household? It is hard to pick just one thing, there are numerous options. Food is usually one of the few bills parents have the ability to reduce in hard times, so to give more food security and reduce the reliance on cheap processed food would be a big benefit. Being able to keep the house warm would help my arthritis and the asthma suffered by my son and I so that it does not flare up in the damp. I could buy equipment for home schooling, or repair the kitchen tap, or not have to rely on hand-me-down clothes from friends and family who have already a shortened life from being worn. I could afford hair cuts for all of us.

Ultimately the £20 uplift would go directly towards the health and prospects of a generation of children, my children, who have so much potential, resilience, imagination and compassion due to their circumstances and the times we live in. And all we need to do is to support their parents to get those children to a point where they can build a good life for themselves. This will not happen if for the sake of £20 they are hungry, or cold or their needs aren’t met. The £20 uplift is the foundation of hope for children.”

I thank Michelle for being willing to share her experience last week and for agreeing to forward her words for me to read to you today. They speak of what happens to families who are not given adequate support, of the difference that £20 per week could, should and would make to those on legacy benefits, and of what will be ripped away in April from those on universal credit. When the discussion opened up, Michelle went on to say that even if the health effects of the pandemic are back under control by the end of March, which is likely to be a stretch, the economic impact for families on low incomes—like Michelle’s—will be felt for months, possibly years, to come.

Michelle will be paying back credit and interest on credit for months, even years, because she needed to purchase the minimum required to ensure that her children could learn at home and to pay for food and other essentials. That shows the deep holes in the social security safety net, both prior to and during the pandemic, that people are relying on credit cards for food, heating and clothes—basic essentials.

As I have said in this Chamber before, the uplift and social security rates in general should not be determined by the pandemic; that should be determined by what people need to live. The Office for Budget Responsibility expects more than 800,000 people to become unemployed in the second quarter of 2021, after the job retention scheme stops again. Will living costs be any less for those households? Will it be any easier for them than it is now with the uplift in place? Absolutely not.

Social security is supposed to be there for any of us when we need it, insuring us against hard times—like the NHS when we are ill. What Michelle and millions of others are telling us is that social security is not adequate to support families, who are having to rely on credit cards to buy food, heating and clothes. By holding off taking the decision any longer, the Government are letting down those families who have no certainty, no security and no means to plan.

Instead of analysing the needs of recipients and permanently uprating universal credit and legacy benefits by £20 a week, the Government have been flying kites about providing a one-off £500 grant, but only for some. That is the UK Government trying to do as little as they can get away with in an attempt to get through a difficult political situation. That would not in any way replace the long-term security that the uplift provided and will do nothing for those newly unemployed after the grant has been applied. Making the £20 per week uplift permanent and extending it to legacy benefits is the least they should be doing, particularly as it will not even make up for the cuts since 2010.

The UK Government have a choice: make the cuts to social security since 2010 a little less worse by making the uplift permanent and extending it to legacy benefits, in turn saving many families from poverty; or cut that lifeline further, making out-of-work support the least generous that it has ever been, impoverishing millions. Today, it appears that we may not even have a vote, most probably because if we did, there would be a significant rebellion by Government Back Benchers. If Ministers do not plan to oppose the motion, they must honour it as quickly as possible. They owe it to Parliament, but, most importantly, they owe it to Michelle and the millions of families such as hers on universal credit and legacy benefits who need this help as soon as possible.

[Mr Deputy Speaker (Mr Nigel Evans)]

The Opposition wind-ups will begin at 6.55 pm, the Government response at 7.05 pm and the Question put at 7.15 pm. There is a three-minute limit on all Back-Bench contributions.

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[Mr Deputy Speaker (Mr Nigel Evans)]

Apologies for the slight delay in the audio over the video, but we heard everything that Kate had to say.

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[Miss Sarah Dines (Derbyshire Dales) (Con) [V]]

It is a pleasure to follow the hon. Member for Bermondsey and Old Southwark (Neil Coyle). As a new MP, I am fascinated by the workings of this House and how Opposition day debates operate in attempts to further the political aims of the Opposition. These debates can certainly be passionate and emotive, but Opposition contributions seem at times to lack a grounding in reality, and they tend to whip up anxiety and despondency. I prefer instead to look at the details and facts—[Inaudible.] The evidence shows that the Government’s measures so far through the pandemic have been truly groundbreaking. [Inaudible.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Stop there, Sarah. We are going to do this just with the audio, so please start that sentence again.

[Miss Dines]

Thank you, Mr Deputy Speaker. It is great to be able to see the—[Inaudible.]

[Mr Deputy Speaker]

Sarah, we really cannot hear you. We will now go to James Murray but will try to get you back when we know we have a much better link.

[James Murray (Ealing North) (Lab/Co-op) [V]]

Our country went into 2021 with soaring covid infection rates, the highest excess death rate in Europe, and having had the worst recession of any major economy. Whatever happens with the vaccination programme, we face many more months of restrictions and the economic impacts will be felt for years to come. Yet the Chancellor and the Government cannot see how wrong it is to take away £20 a week from families who, having been hit by 10 years of cuts to social security and incomes, are now struggling with the extra costs of food and bills in the middle of the worst economic crisis in 300 years. It is a disgrace that today’s debate is even necessary.

This cut to universal credit will hit millions of the poorest families across the country. In my constituency in west London, 44% of children are living in poverty. The cut will hit thousands of families in Ealing North, where over 4,300 households with children received universal credit in August last year, up by more than 1,800 since the start of last year.

The mother of one of those families, Clare, wrote to me on Friday night about today’s debate. She kindly agreed that I could read out a few sentences from her email. She explained that

“the £20 weekly boost is such a lifeline for us, especially for my family. I am a single parent and have an autistic son who is extremely vulnerable.

I also have severe COPD and this extra amount has allowed us to buy some good reading books and nice food which we could not afford without the £20 boost.

My son needs constant care, and just for him to have the books to read gives me some free time to relax and have some time to catch up on chores, and also my sleep as my son only sleeps 4 hours max at night.

I have also been able to bake some nice meals that are nutritious where I could not afford most of the ingredients before the extra was put in place.”

Families such as Clare’s and others across the country need that extra help. The Government must cancel this cut, extend the uplift across legacy benefits and show that they understand the impact that their approach to social security has on people’s lives.

The outbreak has confirmed how inadequate our social security system has become and how challenging it is for so many people to get by from one week to the next. The fact that the Government felt they had to increase universal credit by £20 a week at the outset of the covid crisis shows how insufficient it already was. Beyond the outbreak, we are clear that the system should be replaced with one that offers a proper safety net and decent support for all. Cancelling the £20 cut to universal credit will not right all that is wrong, but it will be a lifeline for millions as we come through this crisis.

[Mr Deputy Speaker (Mr Nigel Evans)]

We will now go back to Sarah Dines; we have an audio link. Sarah, you have the full three minutes, so start right from the very beginning.

[Miss Dines [V]]

Thank you, Mr Deputy Speaker. It is nice to be able to get through at last.

As a new MP, I have been fascinated by the business and workings of this House, and by how Opposition debates operate in an attempt to further the political aims of the Opposition. These debates can certainly be passionate and emotive. Contributions from Opposition Members seem at times to lack a grounding in reality and seem to be an attempt to whip up anxiety and despondency. I prefer instead to look at the details and facts behind these debates.

The evidence undoubtedly shows that the Government’s measures so far through the pandemic have been truly groundbreaking, with a range of measures worth more than £280 billion, including £6 billion in increases to welfare. In addition, there was £1 billion in catch-up funding for schools and vulnerable children, a £500 million hardship fund and £170 million to support food poverty this winter. It is simply untrue to characterise the Government as uncaring and as trying to plan cuts, as the motion says. As a Conservative, I believe that the way out of poverty is through work. The Government support that and have gone further than any Government, with a £30 billion plan for jobs. No past Labour Government compares.

Poverty is complex and multifaceted. It is not simply about welfare spending. It is about attainment, opportunities, addiction, social capital and mental health. The Labour party looks to an ever-increasing welfare state. I do not. I look towards supporting people to be free from the state and to work for themselves, and to supporting and catching them in a safety net when needed. That is precisely what the Government have done. They have supported the poorest households the most, and I am very proud of that. They have reduced the impact of the crisis on income losses by up to two thirds. This is a fantastic achievement. The temporary emergency uplift in universal credit of £1,000 a year will be considered by the Government, and the next steps will be set out fully in the Budget on 3 March 2021. To say anything different is opportunistic.

In Derbyshire Dales, many have impressed upon me that the Government support during the pandemic has been impressive. The Government have gone further than any peacetime Labour Government. I certainly will not vote for this Opposition motion.

[Mr Deputy Speaker]

Thank you, Sarah. We may not have been able to see you but we heard you loud and clear.

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[Julie Marson (Hertford and Stortford) (Con) [V]]

I am proud to state clearly once more that the support the Government have provided to people and businesses during the pandemic has been unparalleled and unprecedented. It is one of the most comprehensive packages of support provided by any Government anywhere in the world, with £280 billion committed in support for jobs and incomes. The emergency response has included the furlough scheme; Government-backed loans; support for the self-employed; mortgage holidays; protection for renters; support for people with housing costs; and a £500 million council tax hardship fund. We extended the energy price cap, and provided a £750 million package to support charities and £1 billion in catch-up funding for schools and vulnerable children. The Government have increased the living wage, raised the national insurance threshold to boost pay, and, of course, provided a £7 billion injection into the welfare system to support millions of households.

We are the party of jobs and job creation. We know that work is the best route to recovery. We have put in place a £30 billion transformative plan for jobs to create jobs and enhance skills, because we know that work, not welfare, is the route to recovery and out of poverty. The Chancellor will make his economic announcements, including those involving universal credit, at the Budget in March. That is entirely right and proper. Long-term decisions of this nature have to be taken in the context of a range of economic levers and situations, and, of course, in the context of paying for them.

As this is an Opposition day debate, let us reflect just for a moment on an Opposition who want to abolish the universal credit system without which our welfare system would have collapsed, let alone coped with 1 million more applicants. They once told us that they would abolish boom and bust, and they opposed every measure to get the nation’s finances back on a sound footing after the financial crisis. And let us not forget that it was only a little over a year ago that they were campaigning to make Jeremy Corbyn our Prime Minister and John McDonnell our Chancellor.

There is no legislative impact from today’s vote and it has no bearing on policy or decision making. What my constituents need is a Government who will deliver real support and real change. That is what this Government are doing. That is what we will set out at the Budget in March.

[Mr Deputy Speaker (Mr Nigel Evans)]

Just a gentle reminder: please do not refer to current Members of Parliament by their names.