My Lords, I will say a brief word on Amendment 62D and move on to the main amendment in the name of the noble Baroness, Lady Manzoor. The noble Earl, Lord Listowel, has clearly made the point about the particular vulnerability of young care leavers and the way the changes to the provision of support for under-25s and universal credit will affect them. In 2013, half of 22 year-olds in the UK still lived with their parents. This Bill makes it more likely that even more young people will need to live at home. The issue, of course, for care leavers is that they do not have a home to live in. One of the problems is that they are simply not in a position to depend on the kind of support and home environment that other young people can turn to as an alternative. Perhaps the Minister will comment on that in responding to this amendment.
Likewise, an important point was made by the noble Earl about the position of care leavers who are much more likely to become teenage mothers and, in turn, lose their children. Certainly, when they are supported appropriately by charities and given appropriate financial support, there is much more chance of their being able to keep the children with them and then try to break the cycle. Without that, there must be some risks. I will be very interested to hear the Minister’s comments.
I really want to talk about universal credit and the implications of the amendment in the name of the noble Baroness, Lady Manzoor. We on these Benches have long supported the principle of universal credit. I
know the Minister has done a lot of work to make sure that the new system will make work pay and will work for working families. But I am getting increasingly concerned, as are many people, about the Treasury’s continuous slashing away at the money involved, which makes it harder and harder for universal credit to do the job. I do not expect him to comment on that, but he has my sympathies.
The speed at which this is being rolled out is also making a difference. As we know, from October 2013 there should have been no more claims for the old legacy working-age benefits. In fact, everyone would have been transferred over by April 2017. By last March, we should have had 4.5 million households on universal credit. The last time I saw the figure, it was about 141,000. There have been various slippages in timing and now it will not be fully rolled out until, I think, 2021. That matters because it goes right to the heart of the transitional protection arrangements for people moving across, as mentioned by the noble Baroness, Lady Manzoor. Along the way, the Treasury has made six—this is the seventh—cuts to universal credit: £6 billion has been slashed from the budget before it has even been fully rolled out. There are some potentially serious traps down the line.
I unreservedly welcome the fact that, after pressure from all quarters and being asked to think again by this House—I pay tribute to my noble friend Lady Hollis and congratulate her on her successful delaying Motion, which caused Mr Osborne to have the opportunity to think again—the Chancellor decided not to proceed with the tax credit cuts. Three million working families would have lost an average of £1,300 a year.
However, as has been mentioned, he did not reverse the comparable cuts in universal credit. I want to understand the implications of that, so I hope the Minister can help us. The Autumn Statement suggested that the Government are still planning to take £10 billion from working families through cuts to universal credit during this Parliament, as a result of removing work incentives and work allowances. That means that 2.6 million families will still be £1,600 worse off by 2020, on average. Therefore, I am trying to understand why the Secretary of State, Iain Duncan Smith, when touring TV and radio stations last week, was able to say that universal credit is a big success. He said on “The Andrew Marr Show” that nobody will lose a penny from the UC cuts. How can that be true?
In the wake of the Autumn Statement, the OBR put more figures out to help people understand. I have been poring over them with a wet towel around my head to try to make sense of them. I suspect that I have not, but the Minister will put me right. There are three issues: whether people on UC will be better off than those on tax credits, whether people transferring from tax credits to universal credit will lose out, and whether anyone will lose out in cash terms come next April.
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The House of Commons Library ran the figures for people on universal credit. It ran the figures for a single parent with two children working full-time on the minimum wage. The noble Baroness, Lady Manzoor,
mentioned this. I could make sense of it only by imagining a person, so I shall call her Jane. Jane is living in the home that she shared with her husband but they have split up and he has moved out. They own the home, the two children are living with her and she is working full-time on the minimum wage. If she were currently claiming universal credit, the Library figures suggest that next April her UC award would fall by £3,084 a year. Dynamically—are noble Lords proud?—because her wages and her tax will change, she will not be £3,000 a year worse off; she will be £2,384 a year worse off. Maybe the Minister could tell me whether that is right and whether there are any working families on UC to whom that could happen next April.
The Library also ran the figures for someone in exactly the same circumstances but still on tax credits. I shall call him John; he lives next door to Jane. John, after paying tax and national insurance, and getting tax credits, will get tax credits worth £2,981 a year more than Jane’s, who lives next door in the same circumstances. Again, could that happen and is it right? If John’s circumstances change so that he ends up moving across to join Jane on universal credit, the real question that comes up is: does he get transitional protection? The Secretary of State seemed to think he would but I would be interested to know what happens. If his circumstances then change—maybe he gets a new job or meets a new partner—would he lose his transitional protection?
Jane and John are hypothetical but the questions are very real for the working families out there in the 98 areas where universal credit is running. There is widespread confusion about what kind of transitional protection is available. My understanding is that the last published document said that transitional protection is available only if you move on to universal credit as part of the mass migration of people who are moved from tax credits to UC. That will not now happen until 2018. However, the Secretary of State, Iain Duncan Smith, said that the DWP will somehow protect the other claimants—I think he said by using the flexible support fund. Could the Minister tell us whether that is right? The flexible support fund is a discretionary fund managed by jobcentres that is normally used to help people who have barriers to work. They might need to travel to interviews; they might need tools to do a job or that kind of thing. The fund’s budget is only £69 million, so if it is that, will the budget be increased to fund this and, if so, by how much?
There are four specific questions that I would be grateful if the Minister could answer. First, what transitional protection will be available for current universal credit claimants when their work allowances are cut in April? How long will it last and how will it be paid for? Secondly, if you are moved across to universal credit as part of the managed migration in 2018, will you get transitional protection and how long will it last? Thirdly, if, like John, you end up moving on to universal credit sooner, ahead of the mass migration, what transitional protection will you get? Finally, in any of these cases, what happens to transitional protection if your circumstances change? Does it stop? If so, can the Minister confirm precisely which circumstances? Would that mean that changing
your job, meeting a new partner or having a baby could see your income reduced by thousands of pounds? What started as something that was meant to be a help to working families is becoming a source of real anxiety. I very much look forward to hearing the Minister’s answers.