Universal Credit

Oral Answers to Questions — Work and Pensions – in the House of Commons at 2:30 pm on 14th February 2011.

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Photo of Bob Blackman Bob Blackman Conservative, Harrow East 2:30 pm, 14th February 2011

What assessment he has made of the likely effect of the introduction of universal credit on the level of the couple penalty.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

What assessment he has made of the likely effect of the introduction of universal credit on the level of the couple penalty.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

The couple penalty is often slightly misunderstood. It is normally created when a higher benefit rate for single people means that couples are materially disadvantaged by living together. It is generally recognised internationally that a saving is made when two people live together, and the figure given by the OECD and others is about 75% at most. In the UK, under the benefit system left by the last Government, workless couples received only 60% of the benefits received by two single workless people, which I believe put us in the bottom four OECD countries. Simultaneously, the proportion of people forming couples is at its lowest at all income levels, about 15% down against other countries. The Institute for Fiscal Studies recognises that the universal credit will start to make inroads into that problem.

Photo of Bob Blackman Bob Blackman Conservative, Harrow East

I thank my right hon. Friend. Does he agree that it cannot be correct that two people who choose to live together as a couple should be penalised by £30 a week in benefits? Surely it is better for people to stay together as a family and be able to care for their family together.

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

From the figures that I have just given and those that we have looked at, there is no question but that the disparity between where the last Government left us and where it is generally accepted that couples should be is the real cause of the problem that is making people live apart, particularly those on lower incomes. I draw attention to Mr Field and his interesting "Panorama" programme. He is to be congratulated on his work in this area, and he has made the very good point that it is madness that the system drives people apart rather than keeping them together.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

There is a welcome across the House for the universal credit, not least because of the impact it will have on low-paid couples in my constituency and across the country. Will my right hon. Friend, on this particular day, reaffirm his commitment to supporting and advocating fiscal incentives for the institution of marriage?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

My hon. Friend knows very well that the issue of fiscal incentives is one for the Chancellor, and I will certainly pass his comments on to the Chancellor and the Prime Minister. When it comes to the benefits system, Members of all parties should recognise the invidious position that even though we know children and elderly people do better where families with two parents work together for them, the system is driving couples apart. That surely cannot be right, and I hope that the matter will unite Members on both sides of the House, as I am sure the right hon. Member for Birkenhead does.

Photo of Frank Field Frank Field Labour, Birkenhead

Does the Secretary of State accept that perhaps the most significant social security reform that he could introduce, if we are concerned with the safe nurturing of children, would be the elimination of the penalty against couples?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I agree that that is an objective that we want to work towards. Clearly, any such change has financial implications, as the right hon. Gentleman knows. As I said, the good thing about universal credit is that it starts the process of eradicating the couple penalty, particularly for people on low incomes. I pay tribute to him, because he has gone on about this for longer than anybody else-perhaps everybody is now listening. He is absolutely right that we must surely not force couples apart, but help them to stay together.

Photo of Luciana Berger Luciana Berger Shadow Minister (Energy and Climate Change)

Does the Minister accept the findings from the Institute for Fiscal Studies that the incentives for lone parents to work more than 16 hours per week will be reduced under the universal credit?

Photo of Iain Duncan Smith Iain Duncan Smith The Secretary of State for Work and Pensions

I welcome the IFS report, which was a fair one. The IFS was positive about the universal credit-most of all, it said that the universal credit is a progressive measure, because it helps the people who are worst off, many of whom, of course, are lone parents. The answer to the hon. Lady is that, yes, some further up the income scale will see a slight change in their marginal deduction rates, but those down in the lower deciles will see a net benefit to their take-home pay.