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Departmental Update

Department for Work and Pensions written statement – made on 31st October 2019.

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Photo of Therese Coffey Therese Coffey The Secretary of State for Work and Pensions

The Department for Work and Pensions is the UK’s biggest public service department, supporting people into work and administering the State Pension and a range of working age, disability and ill health benefits to around 20 million claimants and customers. The Department is carrying out a world-leading transformative welfare agenda, and has had great success in recent years, while the Health and Safety Executive continues to make the workplace safer.

Universal Credit is the biggest change programme in Europe, and the UK is seen as a world leader in welfare. The roll out of Universal Credit is now complete and it is available in every Jobcentre across the country, with 94% of all claims paid in full and on time to 2.5 million people. This financial year we will spend over £95 billion on working age benefits and over £120 billion on benefits for pensioners, bringing the total welfare spending across Government this year up to £220 billion.

The Government believes that work is a pillar of a strong economy, and that work should always pay – according to the 2018 Universal Credit full claimant service survey, 85% of claimants believe getting and keeping a job is their number one priority – with 75% feeling that having almost any job is better than being on benefits. Overall satisfaction among claimants has remained consistently high over the last three years, with four out of five people satisfied with the support they have received when claiming Universal Credit.

The next phase of Universal Credit, ‘Move to UC’, will open up work, allowing people to increase their hours without the penalties they would normally be subject to under Tax Credits. As of 26 September 2019 we have made over 13,800 Severe Disability Premium transitional payments, worth on average £2,280. This represents over 90 per cent of expected backdated payments, totalling over £37.2 million.

Universal Credit introduced a single taper system so payments reduce in a transparent and predictable way as earnings increase, making sure we support claimants in their transition into work. Additionally, when we complete moving legacy benefit claimants over to Universal Credit, an estimated 700,000 more people will get paid their full entitlement because of Universal Credit – getting on average an extra £285 per month.

As Universal Credit was rolled out, we made the taper more generous, reducing it to 63%, which means claimants can work more hours and keep more of their benefits. And again, in April this year, we increased the Universal Credit Work Allowance by £1,000 per year. This means that 2.4 million households will keep an extra £630 of income each year.

To support our claimants, we have introduced additional dedicated specialist Work Coaches, with training covering domestic abuse support, mental health, support for those with disabilities and health conditions, through to specialised local employment support.

Furthermore, we have made changes to support the most vulnerable, such as reducing the length of the maximum single sanction from three years to six months.

From October this year we reduced the normal maximum level of deductions in Universal Credit from 40% to 30% of the Standard Allowance; lowering this rate could see a couple keep up to an extra £600 over 12 months.

To support families and households, we announced the policy to support a maximum of two children would no longer be extended to apply to children born before 6 April 2017 in new claims to Universal Credit. We have also introduced more flexible childcare cost arrangements, as well increasing their worth from up to 70% to up to 85%.

Additionally, we provide alternative payment arrangements such as more frequent payment options and managed payments to landlords – we have created an online system for landlords to facilitate this. We also encourage payments to go to the main carer

From April 2019, Citizens Advice have been delivering the new ‘Help to Claim’ support service to claimants making a new claim for Universal Credit.

In 2012, we reformed the Child Maintenance system with the aim of increasing cooperation between separated parents to meet their financial responsibilities, as this produces the best outcomes for their children. The scheme promotes parental responsibility by encouraging clients to set-up a private family-based arrangement where appropriate - and removing the obligation to join the statutory scheme.

We introduced further enforcement powers at the end of 2018 to enable us to deduct child maintenance directly from a wider range of accounts, target complex earners via a calculation of notional income based on assets and to disqualify non-compliant parents from holding a UK passport.

In June 2019, the Child Maintenance Service was managing 488,300 statutory child maintenance arrangements, covering 706,700 children.

The Government is committed to improving employment outcomes for disabled people and for those with long-term health conditions. We want to support employers to realise the benefits and insight that the huge pool of talented disabled people can bring to the workforce.

That is why we have committed to more than doubling the number of Disability Employment Advisers in our Jobcentres to over 500 to provide specialist expertise to help disabled people enter employment. Alongside this, the Government is spending £55 billion a year on benefits to support disabled people and people with health conditions. That’s a record high and an increase of £10 billion in real terms since 2010.

In November 2017, Improving Lives: The Future of Work, Health and Disability set out the Government’s ten-year plan, including an ambition to see 1 million more disabled people in work by 2027.

Over the past six years, we have seen 1.15 million more disabled people in work, reaching a total of 4.1 million in the second quarter of 2019. This includes an increase of 404,000 over the first two years since the Government announced its 2027 goal.

We are working with employers through our Disability Confident scheme; over 14,000 employers have now signed up and all Government departments are signed up to this scheme.

The Government has completed a consultation on our proposed reforms to Statutory Sick Pay so that it will be better enforced, more flexible and cover the lowest paid employees for the first time.

The Health and Safety Executive continues to make the workplace safer. It has clarified guidance on health and safety regulations to improve employer understanding of the need to consider mental health alongside physical health when undertaking a first aid needs assessment. The UK continues to rate as one of the safest countries in Europe in terms of fatal injury and to perform well against EU countries on a range of other health and safety indicators

Personal Independence Payment (PIP) is a more modern, dynamic and fairer benefit than the predecessor, Disability Living Allowance. PIP focuses support on those experiencing the greatest barriers to living independently. The number of working-age people now receiving support from PIP and DLA is up by over 257,000 since PIP was introduced in 2013 and, crucially, a higher proportion of the over 2.2 million people on PIP receive the top rate of benefit than on DLA – 31% compared to 15%. Claimants are also receiving their benefits sooner – the average time taken to process claims is down by over 60% since July 2014 for new claimants.

We have reduced the number of assessments for those receiving the highest level of support, where needs will not improve, as well as for people over the State Pension age. Up to 325,000 pensioners will benefit from the change to ensure that pensioners will receive ongoing PIP awards with a light touch review at the 10-year point.

The Government’s pensions agenda will provide more security and safety to pensioners in retirement, tackle reckless behaviour from employers on people’s pensions and help more pensioners than ever before to plan for their retirement. In 2019-20 alone, the Government expects to spend over £120 billion on benefits for pensioners - this includes £99 billion of expenditure on the State Pension.

Since 2012, 10 million workers have automatically enrolled into a workplace pension thanks to Automatic Enrolment. This policy alone has helped to reverse a decade of decline in savings and, as of 2019-20, an estimated extra £18.6 billion a year will go into workplace pensions.

We are building on the success of auto-enrolment, looking to make it easier for self-employed people to save. In December 2018 the Government published a report setting out its delivery plan for research and trials to identify the most effective options to increase pension savings among the 4.9 million self-employed workers and we will carry out these trials throughout 2019 to 2021.

The Government introduced the Triple Lock and, accordingly, the full yearly amount of the basic State Pension is around £675 higher than if it had just been up-rated by earnings since April 2010. This is a rise of over £1,600 in cash terms.

Pioneering work has been undertaken to help more people prepare for retirement than ever before. Pensions Dashboards - digital interfaces that will allow people to see online what they have in their various pensions, including their State Pension - will put individuals in control of their data; they will, for the first time, provide clear and simple information regarding pension savings in one place online and help people reconnect with ‘lost’ pensions pots.

The Government is also tackling reckless behaviour of employers that would strip people of their hard earned retirement funds. In February 2019 we announced measures to reduce irresponsible conduct from employers by extending The Pension Regulator’s powers, including the power to send business owners to jail.

Recognising that climate change is a defining national and international emergency, we have introduced three key measures to ensure that pension schemes understand their responsibilities in responding to it. Since January 2019, those running single employer occupational pension schemes are required to establish an effective system of governance, including consideration of environmental, social and governance factors related to investment assets in investment decisions; and schemes with 100 or more members must carry out and document a risk assessment of their system of governance including risks relating to climate change. Furthermore, as of 1st October, trustees of occupational pension schemes must state their policy on how they take account of the financial risks of climate change when developing their investment strategies.

The Government is committed to ensuring that people have access to the information and guidance they need to make effective financial decisions throughout their lives. The Financial Guidance and Claims Act 2018 has brought together the services provided by Pension Wise, the Pensions Advisory Service and the Money Advice Service into a single organisation.

We have promoted long-term savings and pensions products, including the Lifetime Individual Savings Account, to encourage and incentivise more people to make provision for long-term needs, including a house purchase and retirement. We are encouraging working people to save for a workplace pension by helping to protect their savings and monitoring the products, charges, and processes adopted by pension schemes. We are also giving individuals the confidence to save and access their pension pots by providing more guidance and support on pensions through the establishment of the Money and Pensions Service which is delivering free and impartial money and pension guidance, along with debt advice.

We will continue to engage across Government to ensure that we are aligned with the Industrial Strategy, supporting the flexible working task force, and the Careers Strategy and the National Retraining Scheme – ensuring that skills provision meets the needs of an ageing demographic. We have introduced Older Claimant Champions into all 34 Jobcentre Plus districts. We will also continue to work with employers through our Business Champion for Older Workers and the Local Enterprise Partnerships. We will ensure there are provisions for older returners to the workplace by working with Government Equalities Office and HM Treasury, and are engaging with businesses to understand their concerns in line with changes to the ageing demographic of the workforce.

We have also been supporting everyone who can, and wants to work, to continue to work. Initiatives such as the Fuller Working Lives strategy have led to more people aged 50-64 in employment than ever before. In addition to our legislative reforms such as removing the Default Retirement Age and extending the right to request flexible working, we are supporting employers to recruit, re-train and retain older workers.

Our record on employment is strong, and the number of people in work is up by over 3.6 million since 2010 – a near-record high. The employment rate, at 75.9%, is also at a near-record high, with 1,000 more people moving into work on average every day since 2010.

Through our New Enterprise Allowance (NEA) scheme, we have supported 209,000 claimants to create over 130,000 businesses since 2011. On average, we have helped to launch 203 businesses by unemployed benefit claimants, every week since 2017.

UK nationals make up around 90% of all people in work and have accounted for 66% of the rise in employment over the last nine years. Additionally, over 60% of the growth in employment since 2010 has been outside London and the South East. There are now more than 1 million fewer workless households than in 2010 and 730,000 fewer children living in a household where no one works.

Since 2010, over 75% of the growth in employment has been in full time work and employment, and employment high-skilled occupations has risen by over 2.9 million.

There are over 1.8 million more women in work since 2010, and the female unemployment rate is at 3.7% – a near record low; the Black Asian and Minority Ethnic employment rate has reached 66.2% – a near record high – up 7.4% since 2010; and, the youth unemployment level has almost halved since 2010, to a near record low - falling by more than 130 on average every day. Furthermore, wages have been growing for 19 consecutive months.

We are providing targeted support for young people between the ages of 18 and 24 to get into employment, through the Youth Obligation Support Programme (YOSP), as well as other specialised support within Jobcentres for young people.

This statement has also been made in the House of Lords: HLWS66