My Lords, I thank the noble Lord, Lord German, for moving his Motion and for explaining to the House the effects of this measure. I will not detain the House by repeating that explanation. I also understand his desire to mitigate some of the effects of these provisions by seeking to exclude the housing element of universal credit from the regulations, but I think that there is a better way to approach this so I have taken a different direction in my Motion and I will explain why I think the House should agree. I am also being ever-optimistic, hoping that the noble Lord, Lord Freud, will find this a more persuasive case and that by the end he will rise up and cheer in agreement and obviate the need for a vote at all. I shall do my best.
The starting point for Labour is that we support universal credit. We think it is a good idea. Bringing together separate working-age benefits can potentially make the system simpler and should make it easier to work out whether and by how much you would be better off in work. But because we support it, we want it to work, and we understand that to work it needs to get off to the best possible start. Sadly, that has not happened.
When the Welfare Reform Act was going through Parliament, noble Lords from across the House, from all Benches, pointed out to the Government at different stages some of the risks inherent in the approach they were taking and made various suggestions for how the Bill could be improved. Sadly—as we all think—had these been listened to, we might not be in the position we are in now; none the less, things are not looking brilliant. Unfortunately, once the legislation was in, things did not improve. Delivery has been disastrous from the outset, starting with an implementation plan which the Opposition pointed out to Ministers right at the beginning was hopelessly overoptimistic.
The July 2010 Green Paper on universal credit even included the claim that the IT changes necessary to deliver it,
“would not constitute a major IT project”.
In retrospect, the naivety of Ministers in signing off the plan is extraordinary. Since 2011, £130 million of taxpayers’ money has been written off because of failed universal credit IT. The Government still have not published any of the details of how they are going to spend this £12.8 billion budget, having repeatedly claimed that universal credit was on time and on budget when patently it was neither.
What of the impact on claimants? In November 2011, Ministers announced that 1 million people would be claiming universal credit by April 2014 and the project would be fully rolled out to 7 million people within six years, by 2017. But now there are only 65,380 people claiming universal credit and full rollout is still some way off. It is in this context that these regulations have been laid.
The noble Lord, Lord German, cited the damning report from the Government’s Social Security Advisory Committee, as well as the concerns expressed by our own Secondary Legislation Scrutiny Committee. As he explained, the provisions will extend the waiting time to seven days. They are already in place for jobseeker’s allowance and employment and support allowance but those are normally paid fortnightly and, as the noble Lord, Lord German, explained, the universal credit system is paid monthly and people could find themselves waiting six weeks for money, and at that point getting an amount of money equivalent to only a month minus seven days’ allowance.
When the Social Security Advisory Committee looked at the regulations and recommended, unusually, that they should not be made, the Government’s only response was that they did not accept the SSAC’s recommendation because the risks were outweighed by the benefits that could accrue from reinvesting the savings in measures to help claimants get into work. When the scrutiny committee pressed them on this and said in that case could they explain how they were going to spend this money, all the Government would say was that during 2015-16 they would commit only to spend the money in this way but they would not give any plans for subsequent years or any detail about how the money might be spent. Since that appeared to be the Government’s only defence to the SSAC’s report, it is, frankly, unreasonable for them not to have offered more information when asked to do so by the scrutiny committee.
Can the Minister give the House the kind of detailed breakdown of costs and savings that he was specifically asked for by the scrutiny committee—repeatedly—and which he simply failed to give? The change is described as a “save to spend” measure, which will save £150 million a year once universal credit has been rolled out. The savings will fund measures to get people off benefit and into work. Those savings are predicated on the full rollout to 7 million people. We have 65,000 people so £150 million does not seem a reasonable assumption for the savings at the moment. Will the Minister please tell us? If the figure is proportionate, the back of my envelope suggests that it would cost £1.4 million. I presume it is not proportionate but I invite the Minister therefore to give us an up-to-date estimate of savings in this and the next financial year. The scrutiny committee asked for this but he simply failed to do it.
The only other bit of financial information I could glean was in the Budget costings, which said that the Government would have to spend an extra £5 million if the start of these regulations was delayed by a month. Is that a good way to extrapolate the cost and, if so, will the Minister explain it to us? As the noble Lord, Lord German, pointed out, the Social Security Advisory Committee said that the DWP should give claimants more information about how to get an advance. The Government said they would look at that in the digital process, where nothing is mentioned, so will the Minister tell us what is going on?
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In summary, the critiques have suggested that when the regulations were published, there were problems with the impact on claimants waiting six weeks. They have also pointed to the lack of information about the number of people affected, the costs rolled out and the savings that are to be made, as well as the lack of detail to back up the Government’s claim that they were going to reinvest savings—there is no information on whether they are going to be reinvested every year, spent on something new or used to offset the existing already-planned activity.
That would have been bad enough but the picture has got worse since then. The Government were also criticised for not producing an impact assessment. Even if they had done so, in the past week it would have become completely out of date because the Budget contained a whole raft of measures that will have a significant impact on universal credit. These include: freezing the main rate of universal credit and the limited capability for work element for four years; reducing the benefit cap; removing the family element and restricting the child element in universal credit; extending conditionality rules in universal credit to parents of three and four year-olds; reducing the work allowances in universal credit; and ending the automatic entitlement for out-of-work young people.
Cumulatively, those measures could have a significant impact. Will the Government tell us what that impact will be? For example, will the Minister tell us if the total caseload on universal credit is likely to change? Will he tell us what the impact will be on the average entitlement to individuals? Will he tell us if work incentives or gains to work will change? It is hard to imagine they will not, given that the amount you are allowed to earn before you lose your universal credit is coming down; and the taper means that that money is going to be taken away from you much more quickly. What change is that going to make? If we do not have that information, we are being asked to fly without radar.
Universal credit is only an infant. It is barely crawling. It will be March or April before it is even rolled out to all single unemployed claimants, never mind families with children and all the complex cases that will come thereafter. Once families are included, the size of awards will rise significantly, as well as the number of claims being processed. The Government will also have to invent and deliver a mechanism for getting free school meals to claimants since they are currently attached to benefits that are being abolished. The same applies to all the other passported benefits that are similarly attached. What happens if, as universal
credit scales up from 65,000 people to 7 million people, the IT system slows down and benefits are delayed for even longer than the six weeks referred to by the noble Lord, Lord German? What happens then to the system of delaying payments?
In other words, we simply do not yet know if universal credit is going to work and what the full range of implications will be so I urge the Minister to think very hard before pressing ahead with the regulations. At a time of such uncertainty and such pressure on his beloved universal credit, is this really the time to step ahead with these measures? Would it not be more responsible to wait until universal credit has been rolled out, has been seen to work and is working properly? The Minister could then come to Parliament and show us it was working and at that point we would be in a position to understand the consequences.
I return to where I started: we in Labour back the idea of universal credit. We want it to work but it has had a very shaky start, it is still deeply unstable and its future has suddenly been thrown into severe doubt and confusion by the Chancellor in his summer Budget. Why put yet another burden on it at this difficult time? I urge the Minister to think again. Millions of people will eventually depend on universal credit. They need it to work so that they can work and live and pay their rent and feed their children. For their sake, the Minister should step back from this measure today.