Universal Credit

Part of Estimates 2014-15 — Department for Work and Pensions – in the House of Commons at 6:57 pm on 7th July 2014.

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Photo of Nigel Mills Nigel Mills Conservative, Amber Valley 6:57 pm, 7th July 2014

It is a pleasure to follow Debbie Abrahams in what seems to have become a very large meeting of the Select Committee. We will see whether that changes by the end of the debate. It is a pleasure to be in the Chamber talking about universal credit again. I forget how many times in the past year we have done so in the course of ministerial statements, urgent questions or other debates on the same topic. We may have spent more hours debating it than people have spent claiming it, but I hope that will not continue to be the case.

When my hon. Friend Anne Marie Morris spoke, she confirmed that there is still general support for the principle of universal credit. I took issue with the Chair of the Select Committee in a debate last week when she rightly set out how hard welfare reform is, but we have to bite the bullet. We cannot keep tweaking and expanding over-complex systems. At some stage we need to start again with a new system that meets modern needs. We must accept that the existing architecture will not last much longer without falling over in an awful heap. We need to find a new welfare system that works for the people who claim from it, works for the taxpayer and achieves the outcomes that we want.

I hope the Government will press on with universal credit. I hope they can find a smoother path than there has been so far, but the direction of travel is right. I hope we can reach the end position more quickly than we fear. It is worth reiterating what we are trying to replace. The NAO report set out that we are trying to replace six different benefit systems that have about 13 million annual claims and pay out about £67 billion a year. Those are huge amounts of money and huge complexity that we are trying to sort out.

For the investment of £2.4 billion—perhaps the Minister could clarify whether we are expecting a higher cost for universal credit than the original estimate—we are expecting

£38 billion worth of savings by 2023. The Government response quoted a £35 billion benefit; I assume that that is the net of those two numbers, and not that the estimated saving has drifted down a bit. Again, it would be helpful to understand what savings we think there will be over the period. I think there is to be an annual saving of £7 billion, so there is a huge prize for making the system work. It should be better for claimants, who will understand what they will get, and better for the people administering UC, who will understand what they should be giving out. I think that we have all been in that awful situation of hearing someone ask, “Am I better off in work or on benefits?” That is not a simple calculation. It is hugely complex to work out the answer, but we need to be able to answer that clearly.

I agree with what my hon. Friend Mike Freer said when we went to see UC at work in the north-west. What sticks in my memory is the genuine enthusiasm on the part of everyone who was working with UC for the system, the ideas and the changes. However, I also remember the horribly clunky and complex IT systems that we saw, which did not seem able to talk to each other, and which required a lot of manual interventions to make the processes work. I am looking forward to going to Hammersmith in October to see the latest iteration of how UC works, and to see whether we have managed to get a much slicker and smoother system. I certainly hope that we have.

There have been two benefits from this change. We hear that the claimant commitment, which has been rolled out in my constituency, is bringing about real changes in behaviour. The contract part of that helps to make it clear to people what they are expected to do; that is working. The other area where we have seen real advantages is in the use of real-time information. Many of us perhaps wrongly and cynically feared that that would be the bit of the process that would fall over; we feared that Her Majesty’s Revenue and Customs would struggle to make it work, and that trying to add it to its complex systems might be a bit too much. That has actually worked fine; the data seem to work, and there are even more enhancements that we can make to the use of that in the meantime, before we get to see the whole UC in action. So there have been some positive steps so far.

Only about 7,000 people are claiming UC. We have to be honest: that is a long way short of where the Government, the Committee, and indeed everyone, were hoping the UC would be. We have to accept that that is disappointing, but it is far better than rushing on with the system only to have it completely fall over, and creating a tax credits-type fiasco of the kind that we all remember from a decade or so ago. I do not remember the person who headed the Department responsible for tax credits, or the responsible Minister, having to resign. I do not remember the then Chancellor holding his hands up and saying, “I think I’ll resign in embarrassment at this farce.” It is a bit rich to call for the Secretary of State to resign when these implementation mistakes were not his fault; as I understand it, he spotted what was going wrong and sorted it out. There is no call for him to resign at all; that was a cheap and unnecessary shot.

I agree with the concerns expressed about the engagement with the Select Committee; that was a bit of a disappointment to us. Clearly, there had been a long period in which it was known that there were issues with UC. A lot of money had been wasted, and there had been lots of changes to the programme; the Committee was just not aware of that. I accept that the National Audit Office was involved, and that the Public Accounts Committee had various runs around this, but it would have felt a lot better for us, when we were trying to scrutinise the Department’s performance and finances, and the programme as a whole from a policy perspective, if we had had some kind of understanding that there were pretty major issues that will make the project look a lot different from how it was meant to look. That would have been a slightly more respectful way to treat the Committee. I do not expect daily updates on everything that is happening, but we are talking about something fundamental. That could have been handled a little better. Perhaps we would then have had a slightly less tense meeting with the Secretary of State earlier this year. I personally do not recall finding him offensive or unhelpful; the meeting was a little bad-tempered, but I suppose that when one is scrutinising someone, it can be a little difficult. I suspect that there was fault on all sides in that very long meeting.

I will come back to the Committee’s recommendation on how many IT systems we should be working on. My hon. Friend David Mowat may have clarified something, but I am not sure that we can say that the new digital end-state solution is an enhancement of the current one. I think that we have always understood that a twin-track approach was being taken; we were working on two different systems at the same time, one of which would succeed the other. There are reports that the Cabinet Office recommended moving to the end-state solution earlier this year, rather than staying with the twin-track approach.

There is a fundamental question here: if we are working on two different systems, one of which will succeed the other, and there are only 7,000 or so people claiming on the first one, is it better to focus all resources on the final end-state system, and divert people, money and time to that, rather than trying to work on both at the same time, even if that means a slightly longer implementation period, and a slight further delay? Perhaps testing just one system may get us to the right position; I do not know. It may be that to make this work, we have to go through the first system before we can move on to the second. The answers that we have had on that are not clear. It looks to quite a lot of people as though there may be a more cost-effective way of achieving this, given the timetable that we are on.

I reiterate my view that this is a great reform; everyone should want to see it work. I ask the Government to press on and make it work.