Universal Credit

Part of the debate – in the House of Commons at 11:47 am on 23rd November 2017.

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Photo of David Gauke David Gauke The Secretary of State for Work and Pensions 11:47 am, 23rd November 2017

With permission, Mr Speaker, following the announcement made by my right hon. Friend the Chancellor in his Budget speech yesterday, I shall make a statement on universal credit.

Universal credit represents the biggest modernisation of the welfare state in a generation. It supports those who can work and cares for those who cannot. Under universal credit, people are moving into work faster and staying in work longer than under the previous system. Once it is fully rolled out it will boost employment by about 250,000, which is equivalent to about 400 extra jobs for every constituency. It was introduced to replace the complex and failed benefit system run by the last Government, which created cliff edges, discouraging people from working more than 16 hours a week and trapping 1.5 million on out-of-work benefits for nearly a decade. Members on both sides of the House have voiced their support for the principles underpinning universal credit. It is a modern welfare system which—through one simple monthly payment—ensures that work always pays, mirrors the world of work, and helps people to earn their way out of financial insecurity and welfare dependency.

As we introduce universal credit, we are constantly improving the way in which the system works. We recently introduced changes to ensure that everyone who needs advance payments has access to them, and we are making our telephone lines Freephone numbers. I have consistently made it clear that we will continue to introduce universal credit gradually. Of the total number of households that will eventually move on to it, 9% are currently receiving it, and the number will increase to 12% by February. That will enable us to make improvements over time.

Colleagues have had concerns about the waiting time for the first payment, and I am grateful to my parliamentary colleagues for their constructive engagement on this issue. There have been several debates here and in the other place. This statement responds to them and fulfils the commitment made on behalf of the Government by my right hon. Friend the Leader of the House in relation to the resolution of the House on 18 October 2017. We are now offering a balanced package of improvements that puts more money into claimants’ hands earlier, ensuring extra support for those who most need it.

Next month, new guidance will be issued to staff to ensure that claimants in the private rented sector who have their housing benefit paid directly to landlords are offered that option when they join universal credit. In January we will make two changes to advances. First, the period over which an advance is recovered will increase from six to 12 months, making it easier for claimants to manage their finances. That will apply regardless of the level of advance claimed. Secondly, we are increasing the amount of support a claimant can receive from up to 50% of their estimated entitlement to up to 100%, interest free. In practice, that means that new claimants in December could already receive an advance of up to 50% of their estimated overall entitlement, and may receive a second advance to take it up to 100% in the new year. Taken with the first payment, that means that claimants in need could receive nearly double the money they would previously have received. In addition, from spring next year we will make it possible to apply for an advance online, further increasing accessibility for those who need it.

From February, we will remove the seven-day waiting period, reducing the length of time claimants might wait to receive their first full payment. From April, for new claimants already receiving support towards their housing costs, we will provide an additional payment of two weeks of their housing benefit to support them as they transition to universal credit, helping to address the issue of rent arrears for those who most need it. That is a well-targeted measure that will support 2.3 million people, including the most vulnerable, with an unrecoverable automatic payment worth an average of £233 each. This is a one-off investment of £550 million to ensure that universal credit supports those who need it.

In April, as a short-term measure, we will change how claimants in temporary accommodation receive support for their housing costs to ensure that local authorities can recover more of their costs and can therefore continue to offer this valuable support to those who need it most. We will also consider longer-term solutions.

The majority of claimants are comfortable managing their finances. However, personal budgeting support and digital skills training are provided to claimants through universal support, delivered through local authorities. Building on this, we are exploring with Citizens Advice the scope for greater collaborative working to help claimants locally as they move to universal credit.

We must remember that universal credit is aimed at supporting those out of work to move into work, and, once in work, to progress and increase their earnings. That is why, in addition to these measures, the Government have allocated £8 million over four years to conduct a number of tests and trials to support development of the evidence about what works to help people progress in work. This is a comprehensive and wide-ranging package worth £1.5 billion, offering significantly more support than a simple reduction in the wait for the first payment to one month.

To deliver this package, we have carefully revised the UC roll-out plan to ensure that we continue to safely and gradually roll out this important welfare reform. I will place the updated roll-out plan in the House of Commons Library. This does not change the final point at which the roll-out of universal credit will be completed.

To help to ensure a smooth transition to full service, we have also decided to close new claims to our prototype universal credit live service. That will not affect any existing claims. In addition, currently any new UC claim from a family with three or more children will be routed back to tax credits until November 2018. With the extension to the roll-out plan that will now shift to the end of January 2019.

This is a comprehensive package that responds to concerns raised inside and outside the House. We have a clear objective: to ensure that as many people as possible get the opportunity to work, and to maximise their potential to better their circumstances. We will continue to roll out universal credit in a steady and considered manner, and in doing so deliver a welfare reform that will positively transform lives. I commend the statement to the House.