Universal Credit: Financial Resilience

Oral Answers to Questions — Work and Pensions – in the House of Commons on 7th October 2019.

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Photo of Patrick Grady Patrick Grady SNP Chief Whip

What assessment she has made of the effect of transferring to universal credit on households’ levels of financial resilience.

Photo of Martyn Day Martyn Day Scottish National Party, Linlithgow and East Falkirk

What assessment she has made of the effect of transferring to universal credit on households’ levels of financial resilience.

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

Universal credit ensures that support goes to those who need it, allowing 700,000 more people to receive benefits than did previously—this is worth approximately an extra £2.4 billion. Those who move to UC from legacy benefits and whose circumstances remain the same will be eligible for protection of their entitlement at the point of transition.

Photo of Patrick Grady Patrick Grady SNP Chief Whip

This is Challenge Poverty Week, and plenty of people are challenged by UC. They face what Citizens Advice Scotland describes as an “acute dilemma” between enforced hardship for five weeks, while there is no income whatsoever, and ongoing hardship if they choose to take out a loan and have to face reduced monthly payments while they pay back that loan for the first five weeks.

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

The situation is that this is an assessment period and no one has to wait to receive a UC payment; an advance of up to 100% is available to those in need, and significant funding has gone to Citizens Advice Scotland.

Photo of Martyn Day Martyn Day Scottish National Party, Linlithgow and East Falkirk

Some 700,000 households yet to move to UC have insufficient savings to cover that five-week wait, which clearly proves that UC is not working. Will the Minister consider making that advance payment to claimants a non-refundable first UC payment?

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

As the hon. Gentleman is aware, there is a managed migration pilot in Harrogate, where we are learning lessons, and I take on board the points he makes. That completes at the end of 2020 and, obviously, everyone not in the pilot stays on the legacy system as it currently runs.

Photo of Stephen Crabb Stephen Crabb Conservative, Preseli Pembrokeshire

One important way for people on UC to build their financial resilience is through regular saving, although that can feel incredibly difficult for those on lower incomes. Does the Minister agree that the Government’s Help to Save scheme, which is precisely for people on tax credits and UC and which provides a 50% bonus on their savings, is a really important tool?

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

Just today, I met Toynbee Hall and other organisations that are championing the idea of Help to Save. It is making a massive difference, and it is linked to automatic enrolment and to various other schemes we are trying to pioneer in order to ensure that people have savings as well as UC.

Photo of Michael Tomlinson Michael Tomlinson Conservative, Mid Dorset and North Poole

I visited my local jobcentre, and it is very positive about the effects of UC. Specifically on financial resilience, how many people have been helped into work and the security of a regular pay packet as a result of UC?

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

My hon. Friend makes the good point that hundreds of thousands of people have been helped into work, but more particularly this is about the difference between the current system and the legacy system: we now have a dedicated work coach and personalised support; we have scrapped the 16-hour cliff edge; there is more help with childcare; and we have given additional support that was never there under the legacy system.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Transport)

A young constituent of mine could not afford to go to his UC appointment, was sanctioned and then lost his home in York’s resettlement project and ended up on the streets. We were told that the Government would fix the problems with UC as it was being rolled out. Why have the Government not stuck to that commitment?

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

If the individual case is sent to the Minister with responsibility for UC, they will take that up and respond accordingly.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

If people are paid on a four-week cycle, once a year they get paid twice in the same month, which disrupts the UC payment for two months. Will the Minister meet me to see what we can do to prevent these cash flow issues?

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

I take the point that my hon. Friend makes, in his usual astute way, and I know that the Minister concerned will be happy to have a meeting with him.

Photo of Ruth George Ruth George Labour, High Peak

Several of my constituents have been victims of UC fraudsters, and I have written to Ministers about this on several occasions. I have now received a response to say that only

“where there is clear evidence that the claimant had no involvement in that claim” will the Department “consider re-instating legacy benefits” and consider repaying the advance that was made to them. The claimants are being asked to an interview under caution, which is incredibly intimidating, and they have no access to legal advice and support for that. What is the Department going to do to stop intimidating such victims?

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

As we discussed before the start of questions, the hon. Lady knows that I will soon write to her in great detail on those particular points. The individual issue is being addressed so that there is a much gentler way forward. We are reforming the way that advances are made so that there is no fraud involved in the process.

Photo of Heidi Allen Heidi Allen Independent, South Cambridgeshire

I hope the Minister will forgive me, but I was hoping to address my question to the new Secretary of State. I am interested to know what she has learned so far about the five-week wait and the damage it does. People have more debt when they come on to universal credit than they had on legacy benefits, and the advance payment is another debt that must be repaid from a meagre amount of benefit, frozen for three years. When is the Secretary of State going to look into getting rid of the five-week wait so that people get non-repayable money into their pockets more swiftly? They cannot wait for five weeks.

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

I am sure the Secretary of State looks forward to appearing before the Select Committee on Work and Pensions, of which the hon. Lady is a member, next week.

An advance is available to people in the usual way. Supported by the Treasury Committee and the Work and Pensions Committee, we have brought in the Money and Pensions Service to provide debt advice and budgeting support for claimants. There is no doubt that the extra money for Help to Claim, which is administered by trusted providers—whether that is the citizens advice bureaux or Citizens Advice Scotland—is very much helping the process.

Photo of Brendan O'Hara Brendan O'Hara Shadow SNP Spokesperson (Inclusive Society)

As my hon. Friend Patrick Grady said, it is Challenge Poverty Week in Scotland, and 400 events will take place to highlight the reality of living in poverty. One of the most significant push factors that take people into poverty has been the five-week waiting time between applying for universal credit and receiving it. Today, three quarters of a million households are unable to cover their outgoings during those five weeks and are trying to repay their universal credit advance. We know it, the public know it and I suspect the Department knows it; when will the Minister do something about it?

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

The hon. Gentleman will understand that it is an assessment period and no one has to wait to receive a UC payment. On migration, there will be a two-week run-on for both housing benefit and employment support benefits.

Photo of Brendan O'Hara Brendan O'Hara Shadow SNP Spokesperson (Inclusive Society)

As part of Scotland’s Challenge Poverty Week, the Joseph Rowntree Foundation has published a report that shows that the Scottish Government’s actions—such as the building of 87,000 affordable homes and the introduction of specific child poverty legislation—are making a real difference in tackling poverty. Given the fact that there is at least one Government on these islands who are determined to tackle the scourge of poverty in our society, is it not time for social security to be devolved fully to the Scottish Parliament?

Photo of Guy Opperman Guy Opperman The Parliamentary Under-Secretary of State for Work and Pensions

There is much that I could say about the Scottish Government and their approach to welfare, but I will pass on that. The point is surely that this Government have introduced childcare changes, more employment and support on an ongoing basis, including through lower taxes. It is obvious that there is a benefit from the changes and advances we have made.