Draft Universal Credit (Transitional Provisions) Regulations 2013
Draft Universal Credit Regulations 2013
The Committee consisted of the following Members:
† Baldwin, Harriett (West Worcestershire) (Con)
† Baron, Mr John (Basildon and Billericay) (Con)
† Blenkinsop, Tom (Middlesbrough South and East Cleveland) (Lab)
† Cryer, John (Leyton and Wanstead) (Lab)
† Hoban, Mr Mark (Minister of State, Department for Work and Pensions)
† Hopkins, Kelvin (Luton North) (Lab)
† Johnson, Joseph (Orpington) (Con)
† Liddell-Grainger, Mr Ian (Bridgwater and West Somerset) (Con)
† Lloyd, Stephen (Eastbourne) (LD)
† Lord, Jonathan (Woking) (Con)
† McCann, Mr Michael (East Kilbride, Strathaven and Lesmahagow) (Lab)
† Mulholland, Greg (Leeds North West) (LD)
† Newton, Sarah (Truro and Falmouth) (Con)
† Offord, Dr Matthew (Hendon) (Con)
Paisley, Ian (North Antrim) (DUP)
† Reed, Steve (Croydon North) (Lab)
† Timms, Stephen (East Ham) (Lab)
† Winnick, Mr David (Walsall North) (Lab)
Rhiannon Hollis, Anna Dickson, Committee Clerks
† attended the Committee
The following also attended ( Standing Order No. 118(2) ) :
Green, Kate (Stretford and Urmston) (Lab)
First Delegated Legislation Committee
Monday 11 February 2013
[Jim Sheridan in the Chair]
Draft Universal Credit (Transitional Provisions) Regulations 2013
4.30 pm
The Minister of State, Department for Work and Pensions (Mr Mark Hoban): I beg to move,
That the Committee has considered the draft Universal Credit (Transitional Provisions) Regulations 2013.
The Chair: With this it will be convenient to consider the draft Universal Credit Regulations 2013.
Mr Hoban: It is a pleasure to serve under your chairmanship this afternoon, Mr Sheridan. These two sets of regulations will allow for the introduction of universal credit as set out in the Welfare Reform Act 2012. This will enable the universal credit pathfinder to be launched on 29 April, six months ahead of the national roll-out which will take place from October. The creation of universal credit lies at the heart of our welfare reform programme: a single income-related benefit for working-age adults. This reform is of huge significance, introducing a system that is both fair and affordable and which meets the needs of the 21st century. The current welfare system is too expensive, too complex and provides poor work incentives. Through UC we aim, above all, to achieve a fundamental change in the attitudes to work, helping people to see clearly that they are better off in work and encouraging and supporting people into work or to increase their hours.
The regulations set out provisions for universal credit, including entitlement, elements of the award, calculation of income and capital, and claimant responsibilities. However, during the pathfinder, a restricted group of people will be able to claim universal credit. This will be limited to more straightforward cases. The transitional regulations specify those cases in detail, but broadly speaking we will accept claims from jobseekers, or people with very low earnings who are single, fit for work, have no children, are not home owners and do not have awards for existing benefits or tax credits.
The pathfinder will operate in four local authority areas in Greater Manchester and Cheshire. These areas are Oldham, Tameside, Warrington and Wigan. The Committee will have noticed that the regulations do not include these locations. Provision for this will be made in the order commencing the relevant provisions of the Act. The pathfinder will allow us to assess the basis claims process for calculation and payment systems; the interfaces with real-time information, local authorities and others; and claimants’ transition into work, all in a live environment. We will test guidance and other materials that are provided to staff for claimants, and we anticipate that we will accept around 9,000 claims for universal credit during the pathfinder.
We will make adjustments and refine our plans as we learn lessons from each phase of the roll-out from the pathfinder onwards. That means we will make further sets of transitional regulations as we move through the delivery phases. Later this year, therefore, regulations providing for the national launch will be laid in good time before that launch at the end of October. This approach will ensure that we move forward with confidence, building up the universal credit case load and geographical coverage in the light of experience.
The overall impact of the universal credit when fully implemented is set out in the updated impact assessment published last December. An estimated 3.1 million households will be, on average, better off by £168 a month under universal credit and potentially the equivalent of up to 300,000 additional people will be in work as a consequence of the improved financial incentives. The extra investment in child care costs for people working less than 16 hours a week is now expected to help an extra 100,000 families at a cost of £200 million. We have invested £2 billion upfront in development and delivery, for example, in new IT for universal credit as set out in the spending review. Over the longer term this will help to make annual administrative savings estimated to be in the order of £200 million a year.
There is keen interest in many aspects of universal credit, especially in the way it has been delivered. This is not covered directly in the regulations but I think it will help if I make a few key points. First, the intention is that the benefit should be simple to understand and access. Crucially, it brings together in-work and out-of-work support into a single monthly payment for those who are out of work or on low pay, which will make it easier for people to understand their entitlement and to take responsibility for managing their finances. To support vulnerable people, we have developed a payments exceptions service, which includes budgeting support and a facility to pay some people fortnightly with a view to their moving to monthly payments over time.
The main route for accessing universal credit will be digital channels, although supporting channels, such as telephony, will still be available, as will face-to-face support for claimants locally. The Department has worked closely with Her Majesty’s Revenue and Customs and local authorities to develop those arrangements. Earlier today, we placed in the Library of the House details of the local support services framework and the process for identifying claimants who may require alternative payment arrangements. That guidance has been shaped by a working group of external organisations, including landlords and advisory groups. It sets out the factors that will be considered when, for example, someone has multiple debts, a history of rent arrears or learning difficulties.
Let us be very clear, the guidance is not about labelling people as vulnerable or about writing them off; it is about a proactive and individualised approach that takes referrals from landlords and others, as well as information from the claimant. Crucially, it is about offering people help to become more financially independent wherever possible. We are clear that we will not do anything to put social landlords’ finances at risk. We will continue to discuss with representative organisations how to set appropriate trigger points, for example, at which rent payments will be switched back to the landlord.
For claimants in paid employment, the automated link to the real-time information in the HMRC pay-as-you-earn computer system will have a key role. Department for Work and Pensions and HMRC officials have worked closely together on the requirements and delivery of RTI and on how it supports universal credit. HMRC is on track to expand the RTI pilot, and expects to have about 600 million individual records reported in real time by March 2013.
Stephen Timms (East Ham) (Lab): I am sorry, but I did not hear the figure. How many individuals does the Minister expect to be on RTI by the date he mentioned?
Mr Hoban: By March 2013, we expect to have 6 million individual records reported through RTI. HMRC has put the RTI link in place, ready for the DWP to use in April 2013. Obviously, system testing has been undertaken, and it will be further tested with real data during the phase 1 pathfinder. That will fully test the IT with low numbers, before moving on to test capacity and running with gradually increased numbers in later phases.
There is rightly much interest in the guidance that supports the regulations. We placed sections of that guidance in the Library of the House on 31 January, including for such key sections as child care, claimant commitment, good reason, hardship payments, and exempt and temporary accommodation. Officials worked with stakeholders to produce that guidance. They have consulted the Social Security Advisory Committee and taken its feedback into account.
I am grateful to the Secondary Legislation Scrutiny Committee for its 24th report on the draft Universal Credit Regulations 2013 and associated draft affirmative resolutions. The Committee drew attention to the recent report by the Work and Pensions Committee on universal credit, the Government’s response to which was published on 5 February. We are pleased that the Select Committee supports the principles of universal credit, and we welcome its work.
The regulations have been subject to widespread and wide-ranging consultation and discussion with stakeholders. Last June, the Secretary of State invited the Social Security Advisory Committee to hold a special exercise to scrutinise them. The Committee undertook a public consultation as part of its review, and it has produced a very helpful report. On 10 December 2012, the Department produced a paper that sets out the Secretary of State’s response to that report. We accepted most of the Committee’s 36 recommendations, and welcomed the acknowledgment that the Government’s proposals to simplify the benefits system have the broad support of a significant number of consultant respondents.
I have no doubt that members of the Committee will want to use the next hour and a half to ask questions, which I look forward to, but I now commend the two sets of regulations to the Committee.
4.39 pm
Stephen Timms: I welcome you, Mr Sheridan, to the Committee, and I thank the Minister for his introduction.
I start by making the point that the Opposition have consistently supported the principle of universal credit, because we think that bringing together multiple in-work and out-of-work benefits into a single working age benefit
—an idea that the previous Government were exploring before the general election—offers some important opportunities for simplifying the system. It would potentially increase the take-up of benefits; it would improve work incentives, as the Minister said; and it would make the advantages of being in work clearer than they have been in the past. Those will all be important gains. Unfortunately, we believe that the work that is needed to deliver those opportunities has simply not been completed. In a number of important respects, as I will set out, we strongly disagree with the decisions in the regulations. In other respects, Ministers’ intentions are entirely honourable and laudable, but they have not delivered regulations that implement those intentions. The consequences may be very serious indeed.Throughout the whole exercise, Ministers have highlighted the beneficial impact that universal credit will have on child poverty. It needs to be put on record that Ministers admitted in the most recent impact assessment that that impact will be much less than they first told us. They said initially that the introduction of universal credit would reduce relative child poverty by 350,000, but they admitted in the impact assessment published in December that the reduction would be only 150,000, which is less than half the original figure. At the same time, the Welfare Benefits Up-rating Bill will increase child poverty by 200,000. Will the Minister tell us what changes have led to such a dramatic reduction in the beneficial impacts of universal credit that we have heard about over the past couple of years? The Institute for Fiscal Studies, which is the most authoritative commentator on such matters, will update its forecast for child poverty in the spring, but if we look at the forecast published last year and factor in the changes that the Government have outlined, it is clear that we are on track for an increase in child poverty of more than 500,000 by 2015 and of more than 1 million by 2020. That is a bleak prospect.
Before I turn to the detail of the regulations, I want to highlight one glaring omission from the proposals. We still have no idea of which recipients of universal credit will be passported to other benefits, such as receipt of free school meals, and that should certainly be in regulations by now. Two years ago, when he gave evidence at the start of proceedings to the Welfare Reform Public Bill Committee, on which one or two members of this Committee sat, the Secretary of State for Work and Pensions told us that he would announce proposals on eligibility for free school meals before the Committee finished its work. Here we are two years later, and we still have no idea. The Government have failed to work that out, and when we ask, they tell us that they are still thinking about the matter. Different Departments are discussing it and Ministers are scratching their heads.
The outcome of that decision will have an enormous effect on the overall impact of universal credit, and it will make a huge difference to whether people will be better off in work. If the Government opt, as they are widely expected to do, to determine using a simple income threshold which recipients of universal credit will be eligible for free school meals, universal credit will introduce a massive new disincentive to work and earn more. Until we know the answer to that question, which we were promised two years ago, it will be impossible to assess the overall impact of universal credit.
It is no secret that there is widespread scepticism about whether the revised timetable for universal credit, which has already slipped substantially, can be achieved. The transitional provisions regulations that we are debating this afternoon deal, as the Minister has said, with the pathfinder that is due to start on 29 April. I have specific questions about that. Can the Minister tell us whether the universal credit IT has been taken off the at-risk list maintained by Her Majesty’s Treasury? Is it still on the danger list? Is the system going to be fully ready by 29 April for the very limited set of applicants able to apply for universal credit from that date? Will the RTI system that is being developed by HMRC for pay-as-you-earn be ready to supply all the income data that is needed?
I think the Minister said that 6 million people are going to be in RTI by the start of the pathfinder. Presumably, that does not include all the people—or perhaps it does; perhaps the Minister will clarify—who are going to be applying for universal credit in the pathfinder areas from 29 April. For those who are employees, but who are not going to be in RTI by that time, what will they need to do to provide the income data that are needed from them for their application for universal credit to be processed?
The Minister referred to the very helpful 24th report of the House of Lords Secondary Legislation Scrutiny Committee. He was right to thank their lordships for that report, in which they set out their concerns and doubts. They question whether
“allowing less than six months for the pilot stage”
makes sense. They suggest that that “is over-optimistic”. Given that a limited set of functions will be tested in those six months, simply allowing six months before the full roll-out seems very optimistic indeed.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab): Does my right hon. Friend share my concern that the history of the civil service is littered with examples of large-scale information technology projects that have been put in place by Governments of all different colours on completely unrealistic time scales? If this project goes wrong, the biggest danger is that the people who will suffer are the poorest and most vulnerable in our society.
Stephen Timms: My hon. Friend is absolutely right about the history and about the dangers with this particular project. I certainly was not reassured right at the beginning of this exercise, soon after the 2010 election, when we first started to see the proposals. The initial Green Paper said that it would not constitute a major IT project. However, it is an enormous IT project—denying the scale of it at the outset was not an auspicious start.
How does the Minister respond to the criticism from the House of Lords Secondary Legislation Scrutiny Committee that the project is over-optimistic? What is his contingency plan if the six-month pilot, which is only for part of the functionality, does not fully validate the system? What will he do? Will the full universal credit IT be available for the pathfinders in the north-west in April, or does he expect a significant degree of manual
processing for applications coming in from the pathfinder areas? Will pathfinders in the north-west process the housing cost elements of universal credit or are they being omitted? Will it be local authority staff or Jobcentre Plus staff who process claims and monthly change of circumstances notifications? Who will verify the documents submitted by applicants from April in support of their applications?I have mentioned some general, very troubling concerns.
I now turn to a series of serious problems in the regulations. Regulation 34 of the universal credit regulations limits the amount of support for child care to 70% of the amount paid, up to a maximum set out in regulation 36. It is true that that has been the figure since the Government reduced support to 70% under child care tax credits. However, due to disregards of child care costs in housing benefit and council tax benefit, people in practice often receive up to 96% of their child care costs under the existing system, even with that lower level of support under child care tax credits. All that additional help—the difference between 70% and 96%—will be lost under universal credit. The upper limit will be 70%, and it is estimated that 100,000 families will lose child care support as a result.
Kate Green (Stretford and Urmston) (Lab): I apologise to the Committee that I cannot stay for the whole sitting. Does my right hon. Friend share my concern that the provisions that place a limit on financial support for child care need to be read alongside the expectations on lone parents? They currently enjoy a protection when suitable child care is not available, but such protection will be restricted under the regulations.
Stephen Timms: My hon. Friend is absolutely right and I will address her point shortly. She is right to link the two measures, because the loss incurred, and the greater difficulty that people are therefore going to experience in finding affordable child care, make the worry about the loss of such flexibilities even greater.
There was a big rise in the rate of unemployment among women when child care support under child care tax credits was cut from 80% to 70%. The big further cut under the regulations is bound to mean that a large group of women will no longer be able to afford child care, and therefore will not be able to afford to work. That is in nobody’s interests, which is why we oppose the change. Low-income working families in areas such as London with not only high housing costs, but high child care costs, will be disproportionately affected. The regulations should offer a better deal for child care so that people are not forced to give up work.
Regulation 34(2)(a) gives the Minister the ability not to reimburse any costs he deems to be “excessive”. Will he tell us the circumstances in which he expects to invoke that power? Does he envisage requiring children to be moved to cheaper child care and, if so, in what circumstances? Can he reassure us that an assessment of whether charges are excessive will take full account of the number of hours of child care that somebody needs to support the number of hours for which they work?
I now come to the point raised by my hon. Friend the Member for Stretford and Urmston. I am worried that the flexibilities that were built into benefit legislation by
the previous Government to ensure that work obligations were compatible with child care responsibilities have been omitted from the regulations. Twelve flexibilities were introduced, but only one appears in the regulations—in regulation 88(2)(b).For example, under the Social Security (Lone Parents and Miscellaneous Amendments) Regulations 2008, a single parent with a dependent child can limit their working hours to their child’s usual school hours, even if there are no reasonable prospects of finding work in the vicinity within those hours. The regulations remove that flexibility, despite the clear assurance that I was given in the Welfare Reform Public Bill Committee that that would not be the case. When I asked the Minister’s predecessor specifically about that point, he said:
“We do not intend to change that.”––[Official Report, Welfare Reform Public Bill Committee, 5 April 2011; c. 424.]
The Minister, however, is changing it.
We are told that guidance to advisers will include equivalent safeguards, but that means that the safeguards will be operated only at the adviser’s discretion. The safeguards will not be a requirement in the same way that a commitment in regulations would be and, of course, they will be applied only if the adviser knows what is in the guidance. Knowledge of regulations has been patchy in practice, but I fear that the situation will be even worse with guidance.
Let me give the Minister an example, to which Gingerbread has drawn attention, of a newly single mother who is struggling to balance shift work with caring for two children and finding child care for them, and who worries that she will have to give up her job because she cannot leave them on their own. She is protected from sanctions under current jobseeker’s allowance regulations if she is forced to give up her job because she cannot find child care. However, under these regulations, she will not be protected. The lack of child care might count as a good reason, as outlined in the guidance, but nobody can be sure, because that will depend on the judgment of the adviser. Will the Minister comment on that specific point? Will he strengthen the significance of the guidance so that applying that flexibility will be a requirement, rather than at the discretion of the adviser, as is normally the case?
The flexibilities in regulations that I introduced when I was doing the Minister’s job are there for a good reason. It is a mistake to take them out. At the very least, these universal credit regulations should protect single parents from sanctions when the absence of child care makes it impossible for them to take up or continue in employment. Will the Minister give us an assurance that he will at least monitor the impact of the loss of these flexibilities? Will he commit to publishing how he will train and support Jobcentre Plus advisers to apply the flexibilities that he is now downgrading to guidance? Even the guidance is unclear about what will happen in the case of children who are 13 or over. The existing regulations are clear about that, but his guidance is not. As I have said, only one of the 12 flexibilities that were introduced has survived into these regulations.
Regulation 26 and schedule 4 set out provisions for the increasingly loathed bedroom tax that the Government are introducing. We have argued consistently—we made such arguments in Committee when we were considering the Welfare Reform Bill—that that measure should apply
to social housing tenants only if they have been offered suitable smaller accommodation and then refused it. It is surely indefensible to penalise somebody for something that is impossible for them to change, other than by moving into private sector renting, which would involve a larger housing benefit bill.Mr David Winnick (Walsall North) (Lab): Do not all these regulations that my right hon. Friend is analysing with such ability show a mean and narrow-minded attitude towards the most vulnerable, which is a continuation of what the Government have been doing since they came into office? Is he going to comment on how the regulations will undoubtedly hurt the disabled?
Stephen Timms: I am indeed, and my hon. Friend is absolutely right. There is probably nothing in the regulations that is quite as cruel as this particular measure. As I say, people can do nothing about it, because those who are in a two-bedroom property but have a one-bedroom need will have only a small chance of being able to move to a one-bedroom place.
Kelvin Hopkins (Luton North) (Lab): The simple point has not been made that those in privately rented accommodation and owner-occupiers will not be affected by the measure. Additionally, those who rent three-bedroom houses pay more in rent than those with two-bedroom houses, so they are already paying for the extra bedroom through their rent.
Stephen Timms: My hon. Friend makes a fair point. Of course, similar rules do apply to housing benefit for private sector tenancies. They have done for some time—indeed, that is the Government’s defence for what they are doing in the social rented sector—but, as is clear in many parts of the country, social sector tenants do not have the ability to move to smaller accommodation because no vacant properties are available.
Sarah Newton (Truro and Falmouth) (Con): As one of the stalwarts of the Committee that considered the Welfare Reform Bill, it gives me great pleasure to be here. During that Committee, I remember the then Minister describing the bookshelf that we were building with that Bill, and the regulations are two of the volumes that will be put on that bookshelf.
Is the right hon. Gentleman aware of the huge expansion of the discretionary housing benefit pot that has been given to local authorities? In this year alone, it will be more than £900,000 for my area of Cornwall. The process is working very well, because the council has written—many months in advance—to people who are likely to be affected by extra charges, and it is helping them to make better use of housing so that the shocking waiting list of people who are in dire need of accommodation is reduced. The council is enabling people, in a sensitive way, to move into appropriately sized accommodation, and if those people have particular needs and cannot move, that can be addressed through the very large discretionary housing benefit fund.
Stephen Timms: I am pleased to see the hon. Lady in the room because she will be familiar with a number of these points following our debates in the Welfare Reform
Public Bill Committee nearly two years ago. However, I would say to her that £900,000 is not going to go very far across Cornwall. There has been a substantial and proportionate increase in the amount of discretionary housing payment available, but that will cover only a tiny fraction of the need that will arise on not only this front, but a whole host of other fronts, because people are going to find that they cannot afford to live in their homes any longer. Let me give her an example. I will talk about the benefit cap in more detail shortly, but a parliamentary written answer—this relates to London rather than Cornwall—told us a few weeks ago that 10,600 households in London will lose more than £100 a week when the benefit cap takes effect. A huge chunk of the very limited discretionary housing payments that are being provided would be required to address even a fraction of that. The hon. Lady will be disappointed if she thinks that £900,000 is going to do much to solve the problems in Cornwall.It is increasingly widely recognised that the bedroom tax provisions are unfair. For example, to follow on from the point raised by my hon. Friend the Member for Walsall North, there are cases when people need a separate bedroom on disability grounds. Indeed, a number of aspects of the regulations have caused deep concern among disabled people. Additionally, people who foster children will, naturally, have a spare bedroom between placements, but they will lose housing benefit under the regulations. A bedroom may be empty because someone’s son or daughter is serving overseas in the armed forces, and it is indefensible that people in such circumstances should be penalised by the regulations.
Kelvin Hopkins: I agree strongly with my right hon. Friend. To put it simply, a home is a home, whatever its tenure. Parents and grandparents want their children and grandchildren to come to stay with them from time to time. I can exercise that right because I am an owner-occupier, but are we going to deny that right to ordinary tenants in local authority properties?
Stephen Timms: The Government are going to fine people for exercising that right. People will be able to stay, but that will lead to a significant reduction in housing support. It is unclear what people are supposed to do, because even if they accept that they have to move to a one-bedroom place, the chance of such a local authority or housing association property being available will be very small.
I want to ask the Minister about a specific concern. Following last year’s ruling in the case of Burnip v. Birmingham city council and Anor, does he accept that the regulations are in conflict with the law as it stands? In one of the test cases considered alongside that, it was found that a child with spina bifida and another with Down’s syndrome should not be required to share a bedroom, even though on the basis of their age and gender they would normally be required to do so—and will be required to do so under the regulations. In such cases, the court found that there was a breach of article 14 of the European convention on human rights, which prohibits discrimination against disabled people. That case concerned private rented accommodation for which, as I said, comparable rules have been in place for some
time. However, does the Minister accept that the regulations are contrary to the law and will he confirm that he will amend them before they enter into force to take account of the law as it stands in the light of that case?I have mentioned the benefit cap, which is set out in part 7 of the regulations. It remains the view of the Opposition, as we set out during consideration of the Welfare Reform Bill, that it is wrong to set that cap at a uniform national level that ignores wide variations in rents throughout the country. The policy will have severe consequences in areas where rents are higher, as I mentioned a moment ago.
Steve Reed (Croydon North) (Lab): Does my right hon. Friend agree that, in proposing these regulations, the Government have not fully taken into account the effect on areas such as Croydon North, other parts of outer London and beyond, of the sudden increase in families moving out of more expensive areas, such as inner London? Services such as housing, education and health are already at breaking point.
Stephen Timms: My hon. Friend is absolutely right. Of course, the Government have blinked slightly by delaying the implementation of the benefit cap other than in four London boroughs. I am trying to remember whether Croydon is included as one of the early four; I think it may be. The four boroughs that are ahead of everywhere else are facing unforeseen additional costs and a whole new set of problems, and I think that they are considering taking legal action as a result. It is all a bit of a mess, and the consequences to which my hon. Friend refers are certainly going to be very serious.
On a specific point, in regulation 83, can the Minister confirm that the exemption of somebody receiving disability living allowance or its successor, the personal independence payment, from the benefit cap will continue if that person is in a hospital or care home? It is not entirely clear in the regulations, so I would like clarification on that.
My hon. Friend the Member for Walsall North raised the general point about people with disabilities. One of the features of these regulations that has caused a lot of anger is the abolition of the severe disability premium, or the lack of something like it in the benefits system. More than 230,000 people currently receive the severe disability premium. It is for severely disabled adults living without a non-disabled adult to care for them. Its withdrawal will mean that people in that situation will be much, much worse off than they are under the current system, even after the savings from it have been used to increase the amount paid to people in the support group for employment and support allowance.
The Minister will know that Baroness Tanni Grey-Thompson surveyed hundreds of people who receive the severe disability premium, and it is clear that its abolition will have a severe detrimental impact on many of those people. She recommended the introduction of a self-care addition for people who do not have anyone caring for them, the kind of people who are able to receive the severe disability premium at the moment and for whom the severe disability premium really is a lifeline, enabling them to defray costs which, without it, they could not do. Is the Minister looking at the case that Baroness Grey-Thompson has set out for the self-care
addition? That addition is certainly not in these regulations but it would offer some reassurance if he could tell the Committee that the Government are at least looking at that possibility as a way to limit the damage that will otherwise be inflicted by the abolition of the premium.Mr Winnick: Is this not yet another illustration of the mean and nasty attitude being adopted by this Government? I notice that from time to time when we criticise, the Minister smiles. There is nothing to smile about. Does my right hon. Friend agree that any Tory or Liberal who supports this attack on disabled people, who live on the most limited incomes, should have it on their conscience for as long as they remain Members of Parliament?
Stephen Timms: My hon. Friend is quite right. He may well have seen the work that Baroness Grey-Thompson published on this, and I certainly commend it to every member of the Committee. She draws attention to how the abolition of the severe disability premium will make things extraordinarily difficult for a large number of people.
At the moment the personal allowance for income support for a single person is £71 a week for those 25 or over and £56.25 for those under 25. In the case of a single parent, aged 18 to 25, the higher rate of £71 applies. Under these regulations, however, a single parent aged between 18 and 25 will receive the lower rather than the higher rate. That is a reduction of £15 a week in the support provided. There are at least 175,000 non-working single parents under 25 who will be in scope for this cut. Working single parents will also be affected by the sharp reduction in the allowance for people under 25. The Government have admitted that that change alone will push 100,000 people below the poverty line.
Why are young, single parents being picked out for such harsh treatment in this way? Under the current system, adults aged 21 to 24 living in a household do not cause a reduction in the benefit payable to the household if they are on income-related, out-of-work, benefits. However, under schedule 4 of the regulations they will for the first time attract a non-dependant deduction of £68 a month, presumably on the assumption that they will contribute that amount to the household budget out of their own benefit. That appears to be quite contrary to the Government’s stated intention. If those people cannot find the £68 from their pretty meagre benefits to give to their parents then they will have an incentive to move out and set up home on their own. What is the justification for assuming that someone aged 21 to 24 will make as big a contribution to the household budget as someone over 25 whose benefit is higher? Why is there this fixed £68 a month figure that applies both to people under 25 whose benefit is lower and those who are over 25?
Another very important topic is the provision of support for people living in supported accommodation of one kind or another: domestic violence refuges, hostels for homeless people, accommodation for people with learning disabilities and so on. The Government made a helpful and welcome announcement about that when, in September, they said that charges for supported accommodation will be managed entirely outside universal credit, because it was clear that it would not work within the terms of universal credit. In fact, it is clear
that several matters will not work, but the Government have recognised that one and said that such charges would be taken entirely outside universal credit. That ought to have solved the problem, but unfortunately, in specifying in schedule 1 to the draft Universal Credit Regulations 2013—at the top of page 65—precisely what is outside universal credit, Ministers are using a hopelessly outdated definition of exempt accommodation. The problem is that, in many instances, the landlord is not the provider of support or the holder of the support contract and, under the regulations, the accommodation is not exempt and the charges for it are therefore not outside universal credit, contrary to the Government’s entirely well-meaning intention.Women’s Aid estimates that more than half domestic violence refuges in the country are not covered by the definition in the regulations, including quite a number that local authorities currently treat as exempt. Strictly speaking, local authorities ought not to do so, because of the wording of that definition, but they very sensibly recognise the intention and therefore treat them as exempt. However, the Minister is using the out-of-date definition that means they will not be treated as exempt, which could be disastrous. I am absolutely sure that the Minister wants such accommodation to be exempt, but that will not be achieved by the regulations. To reassure the large numbers of providers of refuges and hostels of all kinds, I hope that he will say that he intends to fix that problem, and that he will give some indication of how he will do so. As the National Housing Federation has stated:
“It is vital that the Government ensures the regulations exempt the full range of supported housing by using a definition of supported housing that reflects the set up of refuges, hostels and specialist schemes for disabled people.”
Another part of the regulations that the Minister knows is a serious problem, but which he has just run out of time to fix, is the wholly inadequate way in which regulations 55 to 64 of the draft Universal Credit Regulations 2013 treat people in self-employment. The hon. Member for Truro and Falmouth, and other members of the Welfare Reform Public Bill Committee, will recall that we had many debates about that in Committee nearly two years ago. Two years on, the Government have still not resolved those problems. Let me quote the summary of the highly respected low incomes tax reform group, which is part of the Chartered Institute of Taxation:
“The system of accounting for self-employed profits devised by the DWP is out of step with generally accepted principles and will present a seriously distorted picture of how the business is doing economically. In particular, the monthly assessment will require small businesses to draw up accounts twelve times a year, not once; and the absence of any carry forward rule will result in genuine trading losses going unrecognised. Worse, the minimum income floor does not allow long enough for a business to grow and develop, gives no help when a business is experiencing a temporary dip in profits, and prevents pension contributions and legitimate business expenses from being fully recognised.”
In other words, it is a disaster for self-employment, at exactly the moment when we should be giving legitimate self-employment all the support that we can: we need more people to start up in business for themselves and to create employment opportunities when unemployment is so high. Tax credits have been supportive of self-employment, but under the regulations, unfortunately,
universal credit will not be. The Minister’s officials have been hearing about such problems for the past two years. The low incomes tax reform group states:“our main concerns remain unanswered.”
I will read some more of the low incomes tax reform group’s statement, because it is important to put this on the record.
“The UC regulations...introduce a method of accounting which completely departs from...generally accepted principles. Under regulations 57-59, businesses will account to DWP month by month on the basis of amounts received in the month minus business expenditure paid out in the month. If that produces a loss for the month, the loss may not be carried forward to subsequent months - it is simply disregarded. If it produces a result lower than a minimum income floor, or MIF, regulation 62 will substitute a MIF equal in most cases to the national minimum wage for a 35 hour working week, less a deemed amount of tax and NIC on that level of earnings.
The main objections to this method of accounting are that one month is an artificially short period over which to draw up a set of accounts;”—
that is a point, I believe, that the Minister will readily acknowledge from his past experience—
“that the cash-in and cash-out basis does not present a true and fair view as it does not relate receipts and expenses to the periods over which they accrue; that the failure to recognise losses further distorts the economic picture; and imposing a MIF does not allow for events beyond the claimants’ control, nor the ups and downs in a normal trading cycle which are part and parcel of any self-employed business. In addition, legitimate business expenditure is doubly limited - first by the denial of any carry-forward relief, secondly by substituting the MIF for the net profit figure for any month in which the net profit figure is lower.
In short, the accounting method imposed by the regulations presents a wholly distorted picture of how the business is doing and ignores the economic reality.”
That describes a pretty serious problem. The measure is a complete mess and a red tape nightmare. The Minister will correct me if I am wrong about this, but take the example of a partnership of five people, which is not unknown, all of whom wish to apply for universal credit. They apply at different times and receive their universal credit payment at different times in the month. Under the regulations, their income for universal credit purposes will be one fifth of the total income of the partnership less expenditure of the partnership over the previous month. If each of the partners claims and receives their universal credit at different times in the month, someone will have to work out the total income and total expenditure for the previous month at five different times during the month. That calculation will have to be computed separately for each of the five people, because each person’s claim will be submitted at a different time in the month. The measure is a shambles, and it will do real damage to employment.
I could say a great deal more but given the time constraints on this debate, I am eager and anxious to hear the Minister’s responses. I will simply say that there is a host of other problems. The regulations assume that there will always be 52 weekly rent payments in a year, when in some years there will be 53, but there seems to be no provision for that in the regulations. Unprecedentedly, there will be no support for mortgage interest for someone who has any earnings at all. People will be entitled to support for mortgage interest only if
they have zero earnings. The linking rules for requalifying for mortgage interest relief have been abandoned altogether. The helpful 13-week rule in housing benefit has been dropped. There are a number of serious problems with limited capability for work elements. The lower rate for a disabled child additional amount is a serious blow to 100,000 disabled children. We debated that in Committee when we considered the Welfare Reform Bill, and no evidence has yet been brought forward to justify that change. It is worth putting it on the record that for quite a lot of people, particularly the second member of a couple where one person is already in work, the work incentives under these arrangements are significantly worse than under the current system, even without the changes to council tax support that make matters worse still.Beyond the sound intentions underlying universal credit, the regulations pose very serious problems. In some cases, bad and frankly cruel things are being done, apparently deliberately, often to very vulnerable people, such as those no longer able to claim severe disability payment. In other cases, it is clear that the Government have simply run out time to fix the problems and are bringing forward regulations that are clearly not up to the job. The Committee should reject both sets of regulations and I will urge members of the Committee to vote against them.
5.26 pm
Kelvin Hopkins: It is a pleasure to serve under your chairmanship, Mr Sheridan. I only wish it were a pleasure to discuss these dreadful ruinous regulations. I congratulate my right hon. Friend on a tour de force, demolishing the arguments for the regulations. They arise because of the dreadful Lord Freud. Lord Freud was a special adviser to the previous Labour Government but he could not get his wicked way with Labour, so he joined the Tory party. The Tories put him in the House of Lords, made him a Minister and he gets his way like that. The regulations are dreadful and come from the mind of Lord Freud. When I saw him perform on television I was not impressed with his mind but I did observe his nastiness, and that is what comes through in the regulations.
I have always thought that the way that we administer benefits of various kinds is a mess. In the previous Parliament I said that no other Government in Europe have three different Government Departments handing out benefits, all of which are means-tested and overlap with each other. There is therefore confusion. Housing benefit is administered by local authorities under the Department for Communities and Local Government. Many other benefits come under the Department for Work and Pensions and, of course, tax credits come under the Treasury. I was strongly in favour of them all being the responsibility of one Department, while at the same time I accept that benefits have to be complex to ensure that nobody suffers. It is not surprising that people—many of them vulnerable, elderly and perhaps of low abilities—find it difficult to get what they are entitled to. Billions are lost over years to people who deserve and need those benefits, simply because they do not and cannot claim. That is a fault of successive Governments who have made life difficult for such people.
We have a tangled undergrowth of means-testing that has caused problems. I was against the means-testing and cuts inflicted on single parents in 1997, and many others since, such as attempts to squeeze benefits for the disabled. Nevertheless, we did ensure that vulnerable people were looked after. That is what is changing now. These reforms are going to have a very negative impact on benefit claimants, and many people will suffer.
Important details of the current benefit system are being lost. It is a shame that my hon. Friend the Member for Stretford and Urmston, the former chief executive of the Child Poverty Action Group, is not able to stay and go into detail, as she is an expert in such matters. I defer to her great knowledge and to that of other hon. Friends but I feel equally angry about the way that people are being treated.
In my constituency of Luton North, 27% of families with dependent children are headed by a single parent. For job-seeking single parents in Luton North, the loss of flexibilities, as referred to by my right hon. Friend the Member for East Ham, will make it much harder for them to dovetail paid work with caring responsibilities. They have a hard life anyway, and this is going to make it harder and reduce their incomes. I return to my point that for an extremely wealthy man such as Lord Freud to spend his night hours studying how to squeeze pennies out of poor people is morally outrageous. I wish that he could hear what I am saying. I like to think that when Labour returns to office, as we undoubtedly will after the next election, we will reverse these measures.
Mr Winnick: I go along with my hon. Friend’s condemnation of Lord Freud. There is no doubt that, politically, he is a nasty piece of work, to say the least, but he would not be able to get his way without a Tory-led Government who are only too keen and enthusiastic not only to take up his proposals, but to add to them.
Kelvin Hopkins: Indeed. Lord Freud knows exactly where his friends are: they were not in the Labour party, but they are in the Conservative party.
Jonathan Lord (Woking) (Con): On a point of order, Mr Sheridan. I thought that the purpose of such Committees was the detailed examination of regulations. Such personal abuse and imputing foul motives to people in the Government is completely out of order in Committee.
Mr Winnick: Take politics out of politics, then!
The Chair: Order. People are entitled to their opinion, but let us try not to be personal. Before Kelvin Hopkins resumes his speech, and given that several hon. Members have indicated that they wish to speak, may I say that it is my intention to call the Minister no later than 5.45 pm?
Kelvin Hopkins: Thank you for your indulgence, Mr Sheridan. I will be brief, because I realise that others will wish to speak. I did not realise that we were nearing the end of our sitting.
Many people in my constituency will suffer. I raised the question of the bedroom tax in the House last week.
It will squeeze people out of central London, and not only into Croydon North, because a target area will also be Luton, which already has a housing waiting and transfer list of 8,000. I thought it was a crisis that we had a list of 4,000 when I was a vice-chair of the housing committee in the ‘70s, but now we have double that number. Thousands of people will be forced out of London. They will go to places such as Luton where housing costs are relatively cheap for the south-east, which will make life even more difficult for my constituents. The Government are making terrible mistakes, and many more people will be miserable as a result of their appalling legislation.5.32 pm
Sarah Newton: I am grateful for the opportunity to speak. Much as I would relish the opportunity to refute completely the personal allegations levelled by Opposition Members at members of the coalition Government—at both our Lib Dem colleagues and Conservatives—I do not have time to do so. However, I am sure there will be opportunities in the Chamber. It is sad indeed to impute the good intentions of the Government, which are simply to look after the most vulnerable people in our society and to develop a welfare system that is fit for the 21st century.
I have a question about young people who have been far away from the workplace and are supported by organisations such as the Prince’s Trust, which does important work to enable people to gather the skills to get into work. At the moment, such organisations are able to do that because the young people claim JSA. The young people are able to undertake programmes that have a high success rate in getting them into employment, back on their feet and playing their full part in society.
When Lord Freud was asked questions about the timeliness of JSA payments under the proposals, the Prince’s Trust was given a woolly answer, so I hope that the Minister will clarify the position. Under normal circumstances, it is expected that people will be able to undertake such programmes and claim JSA for a period of up to eight weeks, although there would be some discretion. Unlike Opposition Members, I place great store by the excellent work that I see in Jobcentre Pluses in my constituency, where the decision makers have the absolute well-being of their clients uppermost in their minds. They exercise the power and discretion that they have been given by the Government to help and support people into employment. Will they be given the same amount of flexibility so that youngsters who benefit from attending courses, which can run for up to 12 weeks, will be able to keep their JSA?
5.34 pm
Greg Mulholland (Leeds North West) (LD): It is a pleasure serve under your chairmanship, Mr Sheridan, and I will not detain the Committee for long.
Although it is incredibly important that we analyse the regulations in detail, as the right hon. Member for East Ham did, the Committee is losing sight of what universal credit is, so it is important to reiterate why it is
being introduced. I hope that we all agree that the principle is sensible, but I am afraid that the previous Government studiously avoided the issue. They said that we needed to overhaul our benefits system, but they did nothing meaningful in 13 years.I served on the Work and Pensions Committee for the entirety of the previous Parliament. Following an inquiry in 2007, we set out recommendations by saying:
“our current benefit systems is stunningly complicated…simplification should be a key priority for the DWP…We believe there are opportunities for merging some benefits, aligning the rules of eligibility and, where means-tests are necessary, the information required from claimants.”
We gave the previous Government a reasonable period of three years to listen to and act on that recommendation, yet they studiously failed to do so. Labour’s 2010 election manifesto stated clearly that it believed that there needed to be an overhaul. After the election, James Purnell, the former Labour Secretary of State for Work and Pensions, said of universal credit,
“the plan to merge many current benefits into one, is a good reform. The present system is too complicated not only for claimants, but also for officials.”
Although there have been some bad-natured contributions to the debate, the right hon. Member for East Ham rightly raised some important issues that I acknowledge should be probed. There are unanswered questions, and I hope that they will be answered by the Minister today, or by Ministers in the future.
It should be clearly on record that universal credit not only will not do some of the things that are suggested of it, but is not even designed to save money. Indeed, it will actually cost more money—it will cost £2 billion to implement. However, it makes sense, firstly because it will fiscally benefit the nation, as in the end there will be a saving from the investment and this right and courageous decision to reform the benefits system. Secondly, it will finally do what Tony Blair and senior Labour Ministers in the previous Government said must happen: it will make work pay. I know that that will never be an exact science and that there can never be a formula or a system that is perfect in every single situation, but the reform will go a long way towards making sure that people are incentivised to work. Rather than having many different systems of tapering for different benefits—we sat through briefing upon briefing on this issue—there will be one taper. Universal credit will make sure that people are incentivised and that going to work is beneficial to them, which is the fundamental principle at the heart of this reform. It makes sense fiscally, and it also gives people dignity because they will no longer be directly incentivised, as they have been for many years, not to work. No politician of any party can sit by and ignore that situation.
Mr Winnick: It is not a question of whether one is for or against universal credit or of whether we want to do what we can to get people into work, if there is work—it goes without saying that we do. However, my right hon. Friend the Member for East Ham clearly indicated that the most vulnerable people will be hit as a result of these regulations, yet the hon. Gentleman is speaking in general terms and has not answered or refuted a single one of my right hon. Friend’s detailed points.
Greg Mulholland: I am delighted to hear the hon. Gentleman finally say he is behind the principles of these reforms, because that was notably absent from his earlier contributions. As I said, the questions that were rightly put deserve answers but, with respect, they should be answered not by me but by the Minister. I acknowledge, however, that there are unanswered questions.
Stephen Lloyd (Eastbourne) (LD): My hon. Friend and I had some concerns about direct payments of universal credit going to recipients rather than landlords. Does he share my appreciation that the Secretary of State recently wrote to me to say that there will be some specific provision to ensure that, if it looks like people in receipt of universal credit are going into rent arrears, that will be dealt with on a case-by-case basis?
Greg Mulholland: I thank my hon. Friend for that helpful intervention. I do indeed welcome that, and I also want to make it clear to the Minister that as we get to, and then go through, the pilot, these things must all be looked at. As with any system, when there are unforeseen problems and consequences, they must be dealt with. That is what pilots are there for.
The thrust of this is simply because the Labour Government’s reforms between 1997 and 2006 clearly weakened incentives to be in work and, for those in work, to increase earnings, which was not sensible. On average, tax and benefit changes meant that someone choosing to work harder kept 2.5p less of every extra pound they earned, which simply did not make sense.
Kelvin Hopkins: There is a constant emphasis on incentivising people to go to work. If, for example, there were jobs available at Vauxhall in Luton paying £400 a week, all the unemployed people would jump at them, but those jobs are not there. We have 2.5 million people unemployed, but when I was a young man, we had 250,000 people unemployed—that is the difference.
Greg Mulholland: I respect the hon. Gentleman very much but, on that point, I have to say that he is being naive. Of course there is a problem now, yet when that was not the case, the previous Government sat back and allowed the situation to continue. I hope that he will acknowledge that that was a scandal.
I want to press the Minister for further clarification about several aspects of the regulations. We need to get an understanding of the Government’s thinking about passported benefits, especially regarding free school meals. If the Minister cannot give clarification on that important element, will he indicate when we will have that?
Secondly, will the Minister give an assurance that the transitional arrangements will be sufficient to deal with the concerns of those who face change and are concerned by them? Thirdly, will he look again at the concern that there is not a direct replication of the severe disability premium? In fulfilling what the Government are trying to achieve, there should not be consequences for certain groups of people, especially those who are particularly vulnerable. I suggest considering a self-care element to avoid imposing a burden of additional care, particularly on younger carers who may find themselves in difficult positions.
5.43 pm
Mr Hoban: We have had a helpful debate. I, too, deplore the personal attacks that were made by the Labour Members. If that is the best that they can come up with, it is not a good answer to the challenge we face of getting more people into work.
May I remind the hon. Member for Luton North that, according to our statistics, we have record numbers of people in work and record numbers of women in work, and that there are 500,000 unfilled vacancies out there? The challenge is this: how do we encourage more people into work? I am sure that he is a regular visitor to his local jobcentre, and I do not know whether he has spoken—
Mr Hoban: I have 15 minutes, so I want to deal with as many questions as possible.
It can take up to an hour to sit down with an adviser and look at the better off in work calculation. That shows the scale of the complexity of the benefit systems. It should be obvious to people that they are better off working compared with not working, and better off working more hours and earning more than they are working fewer hours and earning less. The complexity of the existing system, the fact that we have separate in-work and out-of-work benefits, and the complex use of different premiums make it harder for people to recognise the financial incentives to work. Our reform is intended to help to ensure that people have the right incentives to work and that it is easier to go into work. We do not want them to face the disruption of moving from one benefit to another when they go into work.
If the Opposition are serious about ensuring that we reform the system and support people into work, I hope that they will support the measures we are introducing. They should also see that we have listened, because in the context of direct payments, to which my hon. Friend the Member for Eastbourne referred, we have responded to concerns that have been raised.
The hon. Member for East Kilbride, Strathaven and Lesmahagow said that previous projects had gone wrong—yes, they have. I served on the Committee that considered the Bill that introduced the tax credit system, and we all knew that there would be problems. However, rather than having some big bang IT change, as previous Governments have done, which was what led to such problems, we have decided to launch a pathfinder on 29 April and to start the national roll-out in October. A phased roll-out of the scheme is the best way to learn lessons from our experience, to consolidate and then to move on.
Mr McCann: Will the Minister give way?
Mr Hoban: If I have time, I shall give way to the hon. Gentleman. We are rolling out the scheme methodically to avoid the mistakes of the past and to ensure that we have as smooth a transition to universal credit as possible.
The right hon. Member for East Ham asked whether the pathfinder process would include the housing element. Yes, it will. The housing element will be processed and paid as part of the awards in the pathfinder area. He also
asked a number of questions about IT. This is a significant IT project. As is the case in any major Government project, a proper risk assessment is in place—all hon. Members would expect that—and the project is subject to scrutiny by the major project review group to ensure that robust mitigation of risk is in place. The delivery of universal credit IT has always been planned as a series of incremental releases from April 2013. The first release of the IT to support the pathfinder remains very much on track, and such confidence is important.The right hon. Gentleman has tabled a couple of written questions about that issue and on establishing people’s identity. As jobseekers, all new claimants will be required to attend a new claim interview with the jobcentre and we will conduct ID checks at that time.
Stephen Timms: Will the Minister give way?
Mr Hoban: I have 12 minutes. If I have a chance at the end, I will give way. The right hon. Gentleman asked about the timetable for real-time information, which is an important part. If I think about some of the challenges that we all, as constituency MPs, have experienced with tax credits, one of the biggest is what happens at the end of the year. If someone’s income or circumstances have fluctuated over the year, there is a huge problem of under and overpayments. That is why RTI is important. We are on track and employers will begin sending PAYE returns in real time from April 2013, and we believe that practically all employers will be reporting real time by October 2013, in time for the national roll-out.
A number of hon. Members talked about passported benefits. It is important to recognise that there are 25 passported benefits in England, and around 20 in Scotland and Wales, many with different eligibility criteria. It is important to spend time to get this matter right. Other Departments will need to publish their eligibility criteria for passported benefits under universal credit, but we are conscious of the cliff-edge effect, particularly when it comes to free school meals, and we are working with the Department for Education to look at ways we can help to protect against that. We need to ensure that the criteria for free school meals, when the new scheme is introduced, are fair, simple and easily integrated into existing administrative and delivery systems.
The right hon. Member for East Ham talked about guidance, which plays a key part. That is why I was keen to put the guidance in the Library of the House. We will be, as we are now, dependent on advisers using the guidance. We are developing training material for advisers on universal credit. Advisers currently have access to a comprehensive learning framework, which we need to continue to develop as we roll out.
Let me talk about some of the right hon. Gentleman’s specific questions. First, on child care costs, we are trying to ensure that there is additional support. That is why we have committed to investing an extra £200 million in the child care element of universal credit. Under universal credit, people working for fewer than 16 hours per week will be able to access child care support for the first time. I did not hear any congratulations from Labour Members on that, but it will make a real difference to an extra 100,000 families.
The point I make to the right hon. Gentleman is that yes, we are going to provide 70% of the cost of child care. He compared that to complex interactions with other benefits that may lead to 96% of the cost being remitted, but we must bear in mind that it is on top of the very generous working allowances that the Government have already put in place, so people will already be earning and will also be able to claim 70% of child care costs.
The right hon. Gentleman talked about “excessive” child care costs. I want to be absolutely clear to the Committee: this is not about the cost of child care. In fact, the guidance says that in deciding on excessive child care costs, no account is taken of the level of the child care charge per hour. We are looking to ensure that the hours of child care claimed are commensurate with the number of hours worked. That should also take into account reasonable travel time. We are trying to make sure that rather than some sort of cash limiting, the hours charged reflect the hours worked, plus travel. That is a more pragmatic approach to ensuring that costs are reasonable.
There was some discussion about lone parent conditionality. I want to make it clear to the Committee that we have no intention of forcing parents with child care responsibilities to take jobs that do not fit with those responsibilities. We have chosen to move the flexibilities from regulation to guidance. We think that it is more appropriate to rely on the discretion and judgment of our advisers to make the right decision for families. We will monitor that situation quite carefully and there will be training in place.
Questions about housing were raised by a number of Members. I do not think that any Member’s postbag is different from mine. I get a lot of letters from constituents who are overcrowded and are on a housing waiting list. The hon. Member for Luton North said that the housing waiting list has doubled since he was the chairman of the housing committee in Luton.
Mr Hoban: I am sorry; I over-promoted the hon. Gentleman.
Let us be honest: there was a failure by the previous Government to build sufficient social housing to tackle the housing waiting list. The hon. Member for Walsall North should pay attention. I do not think that it is right to say to a family that is overcrowded, “Don’t you worry, because we’re not going to move the people next door who are in a house that is too big for them. We’re not going to do anything about that. You just stay in the house where you are overcrowded.” I do not think that is fair. We need to ensure that we get people to move around so that we get a much better match between housing need, the size of a house and the number of benefits.
If the hon. Member for Walsall North thinks about it, I do not really think that he disagrees with me on this issue; he will agree that it is right to get people into a house of the right size. If someone is in the private rented sector or owns their home, they have to face those constraints. It is not unreasonable to ask those in
social housing to do the same thing. Some of the more thoughtful housing providers are now looking at how they can match people with different housing needs to facilitate the move from overcrowded accommodation to under-occupied accommodation and to avoid the financial cost. That is not unreasonable.Mr Winnick: Does the Minister not accept that there are circumstances when a spare bedroom is not actually a spare bedroom in real terms, as it is being used by the family for very good and valid reasons—a disabled child, for example. As regards moving, I receive letters from time to time from families who want to move to smaller accommodation, but there is such an acute lack of accommodation—an acute shortage of social housing—that it is simply not possible. The bedroom tax, as it stands, is simply unfair.
Mr Hoban: The hon. Gentleman should ask his colleagues who were Housing Ministers in the previous Government why they left this legacy for us to deal with. It is not something that is suddenly a problem now; it built up under the previous Government, who failed to build enough social housing to tackle overcrowding. The problem is one that we need to resolve, and tackling under-occupancy is a good way to free up accommodation and to get the match better made. I do not think that is a bad thing to do.
Of course, we have tried to mitigate the effect of the change. That is why we added an extra £30 million to the discretionary housing payments fund, which aims to tackle issues such as someone needing an extra bedroom, and is particularly to meet the needs of foster carers.
The right hon. Member for East Ham raised the Burnip case. The Department has appealed to the Supreme Court against the decision in that case. The hearing is scheduled for early December 2013, and we will have to consider the need for further regulation following that decision. Universal credit roll-out starts with single jobseekers, so it is extremely unlikely that we will encounter any cases before the Supreme Court has ruled. However, let me also be very clear that in the Government’s view, the regulations we are considering today are compatible with the European convention on human rights, and we have set out in paragraph 6 of the explanatory memorandum our view with regard to the judgment in the Burnip case.
On the point about self-employment, I understand the right hon. Gentleman’s keenness that generally applied accounting practice should accord with what is in the regulations. However, does he agree that expenses for business entertainment should be borne by the taxpayer through universal credit, rather than discounted from the calculations some months earlier, as set out in paragraph 58(3)(d) of the draft Universal Credit Regulations 2013? There are some legitimate adjustments that can be made. He should look at the regulations again, and take a slightly more pragmatic view than he has done so far.
Stephen Timms: Will the Minister give way?
Mr Hoban: I have three minutes left to deal with the important point made by my hon. Friend the Member for Truro and Falmouth. One of the advantages of the
introduction of universal credit is that there will be more flexibility when it comes to training. We need to ensure that we remove the barriers to work, but we also need to make sure that courses have a good element of job search and that they are focused on employability. Universal credit is not there to subsidise long-term courses, but we can work with the Prince’s Trust and other organisations to tackle those issues.I understand the points that have been made about the severe disability premium, but I say to my hon. Friends that the severe disability premium is poorly targeted, complex, confusing and, as a result, it is in error. It is meant to cover the additional needs of disability, on the assumption of extra cost, but of course we have DLA and then PIP to help to cover those costs as well. We need to sit back and take into account the fact that PIP is there too.
We talked about housing costs. On the definition of exempt accommodation, the regulations carry forward the existing wording. We are aware that providers are expressing concern that they will be disadvantaged, and we will work with them to understand their issues and to find a solution that ensures that their income streams are protected, and that clearly protects housing support in these challenging areas. We are alive to the issue and will work with the providers on it.
This is an important reform. We have spent a lot of time getting it right, to ensure that the roll-out can start at the end of April. It is about supporting people into work, and ensuring that there are seamless in-work and out-of-work benefits. None of us wants to condemn generations to unemployment. This reform is absolutely vital to encourage more people to get into work, to ensure that they have the right to financial support at the right time and suffer none of the disincentives to work that we see now, which arise from the complexity of the tax and benefit system.
On that basis I commend the regulations to the Committee. They are an important part of the implementation of the universal credit. I am sure that
we will have more opportunities in the future—indeed tomorrow—to talk about further sets of regulations. Each time there are transitional regulations moving to the next stage of the pilot, we will come back to talk about further roll-outs in the future.The Committee divided: Ayes 10, Noes 7.
AYES
NOES
Question accordingly agreed to.
That the Committee has considered the draft Universal Credit (Transitional Provisions) Regulations 2013.
DRAFT UNIVERSAL CREDIT REGULATIONS 2013
That the Committee has considered the draft Universal Credit Regulations 2013.—(Mr Hoban.)