Universal Credit - Statement

Part of the debate – in the House of Lords at 5:36 pm on 5th November 2018.

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Photo of Baroness Sherlock Baroness Sherlock Shadow Spokesperson (Work and Pensions), Opposition Senior Whip (Lords) 5:36 pm, 5th November 2018

My Lords, I thank the Minister for repeating the Statement.

This is a very large pile of sticking plaster. I am glad that some of it is there—it is better than not having it—but in fact, it highlights just what a problem lies underneath that which the Government are addressing. For years, Ministers have told the House that all is well with universal credit, and whenever concerns were raised on these or other Benches, they said that we were scaremongering. Whenever charities or churches raised it, they were scaremongering. Even the NAO joined in last June, publishing a damning report about the impact of universal credit. But I am glad that Ministers are beginning to acknowledge that some issues need tackling, and some steps have been taken today which are welcome.

I welcome the increase in work allowances in universal credit. Noble Lords will recall, I am sure, the time in 2015 when my late and sorely missed friend Lady Hollis of Heigham led your Lordships in demanding that the Government think again about those cuts in work allowances. Ministers agreed to do it in tax credits, but they did not for universal credit. But today they have restored £1,000 of that cut, which feels like a good tribute to my noble friend. However, a bit of me feels that it is still only half of what was taken off in that Budget. I am aware that that sounds a bit grudging. I do not like looking a gift horse in the mouth, but if someone gives me two horses then takes them away, then comes back a long time afterwards and gives me one horse, I will still hanker slightly after the two horses that I had in the first place. Your Lordships will forgive me if I am being a bit disgruntled but two horses are better than one. None the less, one horse is better than none. I will stop the metaphor now.

Other things in the Statement are welcome. The decision to roll on other means-tested benefits for two weeks for those moving across to universal credit is good, but the Red Book seems to suggest that that will kick in only from July 2020. Can the Minister clarify whether, if people move across from other benefits any time between now and 2020—for example, because they move into a universal credit area or they have a change of circumstance—they will get no help at all? Will they still be stuck, having to wait five weeks for all this money? What will happen there? I also welcome the minor change to the self-employed rules, but I still think that UC for low-income self-employed people is an absolute mess that will unravel before very long.

The real new announcements today are about managed migration. This really matters because, as the IFS said in its Budget commentary, this is,

“a huge change quite deliberately creating millions of winners and millions of losers. Something like a third … will be at least £1,000 a year worse off under UC than under the legacy system while about a quarter will be at least £1,000 a year better off”.

Ministers keep saying that no one will lose money as a result of moving on to UC. That is not because of generosity; it is because people have transitional protection which says they will not lose out at the point where they move across. However, Ministers do not often tell us that this applies only to some people. There are two ways you can get on to universal credit: through natural migration, where you move to a new area and have a change in circumstances—with this you get no transitional protection; or, at some point between now and three or four years down the road, the Government will move across anyone who is left, in a process that is called managed migration.

As this process is called managed migration, everyone assumed people would be managed. It now turns out they will not be managed at all. They will get a letter saying, “Your benefits are going to be cut off on this date”—I am glad it could be three months rather than one—“and if you don’t make a fresh claim, you will get no money”. If you make a claim after that deadline but within a month, you will get transitional protection; if it is after a month plus a week you will get no transitional protection even if you got your claim in.

Let us bear in mind that this is a complicated process. Around 30% of people who start an online claim give up before it is finished and put into payment. This could be really serious, especially for vulnerable people. The process essentially shifts the burden of responsibility from the state on to the individual, to deal with the consequences of the state moving almost 3 million people from their current benefits; of these, over one-third are either too sick or disabled to work. This is potentially very serious indeed.

The Social Security Advisory Committee had a number of concerns, most of which have been accepted, often in principle. Anyone who has read one of these reports knows that there can be a big difference between accepting something in principle and doing what the committee recommended. One classic example is that the committee suggested that the DWP—rather than making everybody make a fresh claim—could carefully analyse, segment by segment, and look for ways in which certain groups could be carved out and moved across automatically. The DWP simply said no. It said it needed clean data for everybody or that some people such as tax credit recipients may not be eligible. That is not trying. Why will the Government not take up that recommendation and try very hard to see whether some people might not need to make an application?

The Budget announced a further delay to the rollout, which was scored, by my reading, as a net saving to the Government amounting to around £1.2 billion over five years. Can the Minister explain that? I might be completely wrong, but it seems to me that one of the effects of delaying managed migration is that more people will end up moving across to UC on their own—because they move house, have a baby, or their kid leaves home, or whatever. That leaves fewer people at the end. It also means that all those people will not get transitional protection because they were not there at the end, which costs them money but saves the Government money. Does this change make any difference to the number of people who will eventually be in managed migration? The SSAC also raised some real concerns about deliverability. I do not have time today to go through all my outstanding concerns about universal credit. The Minister is shaking her head. Perhaps I can refer her to the questions the committee was asking about operational deliverability; I certainly had a different take from her on that.

I am deeply concerned that this is a sticking plaster while the underlying body is in serious trouble. I believe this could go badly wrong. There is a reason why the Opposition finally ended up calling for the rollout to stop. I am deeply worried that this is not going to work in the way the Government imagine. For 3 million people, as well as all those on the legacy system who will move across sooner, the benefits system is the only thing that stands between many of them and destitution. We cannot afford to get this wrong.