Before considering the individual arguments, I think it would be useful to understand to whom exactly waiting days actually apply. It is not the most vulnerable: care leavers, the terminally ill, victims of domestic violence, youngsters without parental support and prison leavers have all been exempted. It is not those coming from other
benefits such as jobseeker’s allowance or employment and support allowance. We have to remember that because universal credit is a benefit for low-income people in work as well as a safety net, many people in low-income and unstable employment will remain on universal credit as they move in and out of work. Hence, the very people for whom much of the concern has been expressed today will not be affected.
Noble Lords, and indeed the Social Security Advisory Committee’s consultation, highlighted a series of examples of cases that might be affected. These included the effect on a single mother reducing her hours to care for her sick child; the effect on those who have not been able to build up a cushion for a rainy day because they have been in low-paid work, on zero-hour contracts or in in-work poverty; the reluctance of claimants to take short-term employment as they fear they may have to serve waiting days again when the job finishes; the concern of landlords that their tenants might not be able to pay their rent because they lose a week’s housing and the disproportionate effect that that will have in London; and the fear that low-income people may borrow from payday lenders and loan sharks to keep afloat, a point made by the noble Lord—I find it hard not to call him my noble friend—Lord German.
I understand why these examples cause concern. They would cause me concern, too, if I was not confident that in such cases waiting days would not affect the most vulnerable. The single mother, the low paid, and zero-hours contract workers will most likely already be on universal credit while in work if their income is low. If on universal credit, they will not serve waiting days. Even if a person on a zero-hours or a short-term contract comes off universal credit, they will be exempted if they reclaim within six months. People moving from other legacy benefits are also exempted.
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The policy is focused on those who come to universal credit from relatively higher-income employment, who in general go back to work quickly. Around a third of people who come on to jobseeker’s allowance end their claim within a month and around two-thirds do so within three months, in most cases because they have found a new job. By six months, over 80% have ended their claim for jobseeker’s allowance. Without waiting days, some people may get a very small amount of universal credit, which they may not need, given that they have new work.
The Secondary Legislation Scrutiny Committee’s third report of the Session—the merits committee, as the noble Baroness, Lady Thomas, continues to call it—picks up on the Social Security Advisory Committee’s report and the Government’s response, or several responses. In addition to the housing element, which I will pick up on in a moment, the committee asks about access to advances for claimants with new claims to universal credit. I assure the House that most claimants in financial need will be able to claim a universal credit advance. It is possible that there could be a very small number of new claims where insufficient universal credit is payable due to a sanction or fraud penalty—a point raised by the noble Baronesses, Lady Thomas and Lady Lister. However, claimants in these
circumstances can apply for a recoverable hardship payment or can approach their local authority, which can provide assistance.
The committee, as well as the noble Baroness, Lady Thomas, also criticised the fact that no impact assessment was published alongside the Explanatory Memorandum and the equality analysis. As noble Lords will be aware, an impact assessment is not required where the legislation does not directly impose any regulatory, administrative or other obligations on any public or private bodies. Measures are in place to provide support through advances of benefit to those claimants who are in financial need.
The noble Lord, Lord German, gave a considered examination of the issues that relate to housing support during the period of waiting days. At present housing benefit is paid from the Monday after the claim, so housing benefit claimants already have to wait for up to a week for their award to begin. I think I can speak for the whole House when I say that we all agree that the old system of multiple and sometimes overlapping benefits was confusing and could have perverse incentives and disincentives. Because it is a unified benefit available in and out of work, universal credit removes disincentives to work and simplifies the system. To exclude the housing element from the waiting days would add administrative complexity, go against the policy of simplifying income-related benefits, and make the payments confusing to claimants. That point was made by the right reverend Prelate the Bishop of Portsmouth and my noble friend Lord Farmer.
The Social Security Advisory Committee and stakeholders expressed a great deal of concern about this. Again, however, we must recognise that the most vulnerable are protected either by exemptions or because they will already be claiming universal credit while in work. Thus, for them, there will no period of non-entitlement. For other people who do not have the resources to cushion themselves during what, for many, will be a short period before finding work, universal credit advances can be applied for.
I turn to the Motion in the name of the noble Baroness, Lady Sherlock, to delay the enactment of waiting days until after universal credit has been fully rolled out. There is no operational or policy reason for doing this. The systems are in place to implement waiting days in universal credit without any detriment to the more general rollout. Let us remind ourselves that the unified approach of universal credit as a benefit available to those both in and out of work means that people on the lowest incomes will not serve waiting days when their circumstances change. This is very different from legacy systems, where a change of circumstances can mean a new claim for benefit.
The noble Baroness, Lady Sherlock, poured a little bit of cold water on our rollout of universal credit, much to my disappointment. The current expectation is that we will have completed the full rollout of universal credit by 2019. Waiting until full rollout takes place will mean a long period where people on the older legacy benefits such as ESA and JSA are subject to waiting days, while those on universal credit are not. That would clearly create an imbalance in the system during the transitional period.