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Universal Credit and Welfare Changes

Part of the debate – in the House of Commons at 11:50 am on 21st June 2018.

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Photo of Esther McVey Esther McVey The Secretary of State for Work and Pensions 11:50 am, 21st June 2018

This Government are delivering the biggest changes to the welfare state in a generation. We are building a benefits system fit for the 21st century, helping more people into work by providing tailored support and more financial support for the most vulnerable. These changes are designed to reflect not only the technological age we live in, which is having a significant impact on work and communications, but people’s working lives. We are providing extra support for childcare costs, and offering flexibility to look after children or elderly parents. Our reforms take into account flexible working, self-employment, multiple jobs, the gig economy and societal changes, particularly the growing awareness of mental health conditions, which is strongly linked to the changing pace of life and the barrage of constant communications.

We are succeeding in our aim to reshape the system and provide for the most vulnerable. So far, we have supported nearly 3.4 million more people into work since 2010—that is more than 1,000 people a day every day since 2010—producing a record rate of getting people in work and the lowest unemployment level since the 1970s. We are also spending £54 billion on benefits to support disabled people and people with health conditions—this is up £9 billion since 2010. We are also supporting a record 600,000 disabled people who have entered work over a four-year period.

Universal credit is a brand new benefits system. It is based on leading-edge technology and agile working practices. Our strategy is based on continuous improvement, whereby we are listening, learning and adapting our delivery as the changes roll out across the country. The result will be a tailor-made system, based on the individual. This is a unique example of great British innovation, and we are leading the world in developing this kind of person-centred system. Countries such as New Zealand, Spain, France and Canada have met us to see UC, to watch and learn what is happening for the next generation of benefit systems. Let us not forget that we are introducing this new system because the legacy regime it replaces was outdated, not only in terms of an ageing IT infrastructure that was built in the 1980s, but in the way it trapped people in unemployment and disincentivised work.

Today, I am updating the House on the changes we have made to UC as a result of this iterative approach we are taking. That is why last autumn we abolished the seven waiting days from the application process; we put in place the two-week housing benefit run-on to smooth the transition for an applicant moving to UC from the previous system; we ensured that advance payments could be applied for from day one of the application process, for up to 100% of a person’s indicative total claim; and we extended the recovery period for these advances to 12 months. Extra training was given to our work coaches to embed these changes.

Prior to that, we also changed the UC telephone lines to a freephone number to ensure ease of access for claimants enquiring about their claim. Earlier this year we reinstated housing benefit for 18 to 21-year-olds, and ensured that kinship carers are exempt from tax credits changes. Just last week, we announced changes to support the severely disabled when they transition on to UC; within our reforms, we want to ensure that the most vulnerable get the support they need. These proactive changes were made to enhance our new benefits system.

Our modifications to UC have been made alongside significant changes to personal independence payments, to reflect the Government’s support for disabled people and all types of disabilities—unlike the system before UC, which focused on physical disabilities. In fact, within week one of my entering this job, I took the decision not to continue with the historic appeal regarding a High Court judgment on the PIP-amending regulations, in order to support people suffering from overwhelming psychological distress. We have committed to video recording PIP assessments so that everyone involved can be sure of their fair and reviewable outcome, and earlier this week we announced a more practical approach to the assessment of claimants with severe degenerative diseases. Those patients who receive the highest awards will no longer be required to attend regular face-to-face interviews repeatedly to verify their difficult and debilitating circumstances.

Let me turn to the report on universal credit published last week by the National Audit Office, which did not take into account the impact of our recent changes. Our analysis shows that universal credit is working. We already know that it helps more people into work, and to stay in work, than the legacy system. Universal credit has brought together six main benefits, which were administered by different local and national Government agencies. Once fully rolled out, it will be a single, streamlined system, reducing administration costs and providing value for money for all our citizens. The cost per claim has already reduced by 7% since March 2018 and is due to reduce to £173 by 2024-25—around £50 less per claim than legacy cases currently cost us to process.

Beyond the timespan of the NAO report, we have greatly improved our payment timeliness: around 80% of claimants are paid on time, after their initial assessment period. Where new claims have not been paid in full and on time, two thirds have been found to have some form of verification outstanding. Verification is a necessary part of any benefits system and citizens expect such measures to be in place. We need to ensure that we pay the right people the right amount of money.

Upon visiting jobcentres, the NAO observed good relationships between work coaches and claimants. The results we are seeing are thanks to the exceptional hard work that our work coaches put in with claimants day in, day out. UC is projected to help 200,000 people into work, adding £8 billion per year to the economy when it is fully rolled out. Those are conservative estimates, based on robust analysis that has been signed off by the Treasury. At a user level, we know that 83% of universal credit claimants are happy with the service that they receive.

In conclusion, we are building an agile, adaptable system, fit for the 21st century. We want people to reach their potential, regardless of their circumstances or background, and we will make changes, when required, to achieve that ambition. I commend this statement to the House.