13 Jan 2016 : Column 329WH

Westminster Hall

Wednesday 13 January 2016

[Mr David Nuttall in the Chair]

Universal Credit: North-West

9.30 am

Marie Rimmer (St Helens South and Whiston) (Lab): I beg to move,

That this House has considered the effect of the roll-out of universal credit in the North West.

It is a pleasure to serve under your chairmanship, Mr Nuttall. This is the first Westminster Hall debate that I have secured, and I will endeavour to observe the correct procedure. I am pleased to have secured this debate on such a critical subject for my constituents in St Helens South and Whiston and for people across north-west England.

I am sure that no hon. Member would disagree that the recent debate on changes to tax credits has been one of the most important in this Session. Following pressure from Members on both sides of the Commons, the Lords and the public at large asked the Government to think again. The Chancellor announced in the autumn statement that planned changes to tax credits had been scrapped, saying:

“I have listened to the concerns. I hear and understand them. Because I have been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether. Tax credits are being phased out anyway as we introduce universal credit.”—[Official Report, 25 November 2015; Vol. 602, c. 1360.]

However, for many people in the north-west of England the change to universal credit is a reality. The huge changes to our social security system have been trialled with people in the north-west.

Simply because of where they happen to live, many people in my constituency and neighbouring constituencies face dramatic drops in income from April 2016. For 77,378 people in the north-west, or 53% of the 155,000 currently in receipt of universal credit, this is a deeply worrying time. Some 51,000 of those people are in employment, and any of them experiencing changes that warrant a fresh application are seriously concerned. That issue of reduced work allowance is at the forefront of the minds of my constituents and the constituents of many other Members. I urge the Minister to take that away and think again.

The Office for Budget Responsibility expects the universal credit case load to be 330,000 in 2016-17, and many of those claimants will be in the north-west as those who get into work go on to universal credit. If families move from tax credits as part of their managed migration, they will be eligible for transitional protection until such time as their universal credit award catches up or the family experiences significant change to their circumstances. Transitional protection will apply only to families moved over through managed migration. Details on transitional protection have not yet been announced, and I ask for transitional protection to be put on a legal footing.

13 Jan 2016 : Column 330WH

We know from the House of Commons Library that there will be no transitional protection for lone parents aged 25 or over with two children and no housing costs who are working full time—35 hours a week—on the minimum wage in 2015-16 or on the Government’s national living wage in 2016-17. Such a family will lose £2,384 in 2016-17. The same family with the housing element of universal credit will lose £309, and a disabled family with no housing costs will lose £3,000. Many families will face drops in income of between £2,000 and £3,000. That is the effect of these cuts on those whose circumstances have changed and warrant a fresh application.

Rebecca Long Bailey (Salford and Eccles) (Lab): Does my hon. Friend agree that, with cuts to universal credit already being planned, there will be greater demand for transitional funding when current tax credit claimants are migrated on to universal credit?

Marie Rimmer: Yes, there will. How can it be right that anyone should be subject to a great injustice based on a postcode lottery determined by arbitrary decisions and the serial failings of the Department for Work and Pensions in delivering the programmes thus far? We have all heard the arguments on tax credits, and Members on both sides of the House were in agreement. Surely the change of terminology to universal credit from tax credit does not justify or warrant these cuts. It is simply indefensible that some people should be cast aside in this incompetent administrative experiment.

We have experienced other issues during the roll-out of universal credit. It would be unreasonable to assume that such a large scheme could be implemented without hiccups and a certain level of teething problems. The Government were forced to slow down the roll-out of the programme dramatically compared with their original aim. The OBR forecasted in March 2013 that there would be 6.1 million claimants, but it is now expected that 330,000 people will receive universal credit during 2016-17. However, the problems that we have experienced in the north-west go well beyond what could be put down to normal problems that can be ironed out as the system beds in.

A range of administrative issues have had a terrible impact on people in receipt of universal credit. Many of the issues were highlighted in a report by Citizens Advice published in the summer of 2015. That report, “Waiting for Credit,” was drawn from 16 citizens advice bureaux, the majority of them in the north-west, including St Helens CAB. It detailed a range of issues faced by people claiming universal credit and by those trying to access it. For instance, universal credit is paid monthly in arrears. Following a new claim, the aim is for the claimant to be paid within five weeks—that is a total of nine weeks. The time lag causes claimants huge short-term financial difficulties, even when that aim is adhered to. However, the report found that 30% of claimants had to wait even longer.

Graham Evans (Weaver Vale) (Con): I am grateful to the hon. Lady for securing this important debate. She mentioned that people are paid monthly in arrears. Does that not apply to everybody who works for a living and pays taxes, which is what ultimately pays for the welfare?

13 Jan 2016 : Column 331WH

Marie Rimmer: It can take five weeks for people on universal credit to be paid—that is the Government’s aim. If the hon. Gentleman listened to my point, he would know that the report found that 30% of claimants had to wait even longer than the nine-week total. Those people suffer from income deprivation, which is why they are eligible for universal credit and why they are different from those in normal, well-paid work.

The report found that many claimants faced continuing difficulties in getting the right amount, even when their claim had been processed. Basic administrative problems, such as being asked repeatedly for the same documentary evidence, were cited.

Fiona Bruce (Congleton) (Con): The hon. Lady talks about administrative problems, but was not the key problem when we had a Labour Government that many people were left languishing on welfare and given no help at all to find work, some for as long as 10 years? Is that not the key difference from what we now have under this Government? Hundreds of thousands of people are now being supported into work. Is that not better for them, their families and their communities, and for the income that their households earn?

Marie Rimmer: No, I do not agree. People knew what was coming and knew that the funds were available. There are 155,000 people on universal credit now, and I am talking about the problems that they are experiencing now. For most people, not getting paid on time will cause at least some level of difficulty. For people on universal credit, not getting paid can be a catastrophe that makes it impossible to manage everyday living and responsibilities such as heating their home, eating, or clothing their children. Increased numbers of people are in rent arrears.

In my experience, there have been other cases of people facing great hardship through the incompetence of the programme so far. Basic work with different agencies has not taken place. For example, one of my constituents was previously in receipt of jobseeker’s allowance and was subsequently moved on to universal credit. Upon going to the dentist he required treatment, which was free under the NHS. When he was filling in the usual form, he was advised to tick the box marked “income-based jobseeker’s allowance”, as there was no box for universal credit. Subsequently, he was billed and pursued by the NHS Business Services Authority and threatened with county court action for a false declaration. If that is the level of co-operation between different agencies at this stage, what hope is there for the future?

I must highlight the DWP’s use of sanctions in the case of universal credit. It has thus far has been largely concentrated on those who are on jobseeker’s allowance or employment and support allowance. We have all heard of the cases of people who have had their benefits stopped, often for absurdly spurious reasons such as selling poppies or not searching hard enough for jobs on Christmas day—that is true. We have come across many tragic cases of constituents who are literally starving and unable to turn on their heating because they have no money. Sanctions are sometimes imposed for the crime of arriving only a few minutes late for a jobcentre appointment following a hospital appointment.

There is no confidence in the current sanctions regime. It is both incompetent and brutal. There needs to be a full and independent review to restore some kind of

13 Jan 2016 : Column 332WH

confidence in the whole system. It is therefore completely irresponsible to expand the use of sanctions under universal credit to claimants in work.

Conditionality of benefits is being trialled for some of the in-work elements of universal credit. The New Policy Institute published a report into sanctions last year, which said:

“The expansion of conditionality under Universal Credit could see a substantial increase in sanctions: if sanctioning occurred at the same rate as for JSA claimants, then the number could almost double, with an additional 600,000 sanctions.”

It is surely inconceivable that people in work could be left in such a situation because of a Government policy that is supposed to support them for doing the right thing, but that is what will happen unless the Government think again.

To say the least, there has not been a smooth transition to universal credit for people in the north-west region. I do not have enough time to outline the range of problems that we have faced as a result of being the guinea-pig region for the Secretary of State for Work and Pensions.

Mary Robinson (Cheadle) (Con): Does the hon. Lady not agree that behind the roll-out of universal credit is the desire to help working families, to get people back into work and to fulfil the aspirations that people have for their lives and their families, and that it would be much better for us to support that aspiration, support universal credit and iron out all the operational difficulties that she has highlighted?

Marie Rimmer: Universal credit was supposed to simplify the benefits system and increase incentives to work. It has not simplified the benefits system. People have to wait longer, and very often the assessments that they receive are wrong. How does it incentivise people to work if they are subjected to cuts that they would not have been subjected to previously? We have experienced neither benefits being simplified nor incentives to work being increased.

The cuts to the work allowance will destroy the basis of the new system and any incentive or encouragement to work. The Minister said that no one would lose a penny, but now the Government are saying that people should work for three to four hours more a week—200 hours more a year—to be no better off. How does anyone find three to four hours more a week for an adviser to help them when they are in full-time employment anyway?

This change will hit the people who most need help. I urge the Government to stop, think and implement something that will work. They should think again before pursuing these devastating cuts, and, importantly, they should put transitional protection on a legal footing. Until someone’s earnings reach the universal credit work allowance scheme limit, their transitional protection should be put on a legal basis. That is what I ask for.

9.44 am

Graham Evans (Weaver Vale) (Con): Thank you, Mr Nuttall, for calling me to speak in this important debate. It is a pleasure to serve under your chairmanship.

I pay tribute to the hon. Member for St Helens South and Whiston (Marie Rimmer) for bringing this important debate to this Chamber today. In the last Parliament, it was my privilege to work for three years on the Work

13 Jan 2016 : Column 333WH

and Pensions Committee. We conducted an investigation and produced a report on the introduction and roll-out of universal credit, and we visited jobcentres in the Greater Manchester area. Indeed, we also conducted an investigation at about the same time into jobcentres themselves, which was overwhelmingly welcomed by the people at the sharp end—the people who work in jobcentres.

A couple of weeks ago, I visited two local jobcentres—one in Runcorn and one in Northwich—and the staff told me that universal credit made it a lot easier to help people to get into work, particularly the long-term unemployed. Together with the changes that the Government have introduced to tax, which effectively take some of the lowest-paid people out of tax altogether, universal credit helps people who have been unemployed for a long time. There is a clear incentive to work, because people can keep more of their pay. The Government intend to introduce a system whereby people can earn £12,500—just over £1,000 a month—before they start to pay income tax.

Chris Green (Bolton West) (Con): Does my hon. Friend agree that this change marks a profound shift in the welfare system? As many people would expect, the welfare system is now a mechanism to help people into work, as opposed to a catchment for people to remain unemployed.

Graham Evans: I absolutely agree with my hon. Friend; he hits the nail on the head. This change is about enabling people to stand on their own two feet and to get away from the welfare culture that grew under the 13 years of the previous Labour Administration. When Labour introduced tax credits, they were going to cost £4 billion; the figure is now £30 billion. That is simply unaffordable. As a nation, do we pay money to people for not working or do we encourage them to stand on their own two feet and get a job? And as I say, the tax incentive means that people can earn about £1,000 a month before paying tax, because Conservatives believe that people should keep more of their earnings.

Fiona Bruce: Perhaps it is also good to remember that this Government are going to double the amount of free childcare to 30 hours a week, which for working parents of three and four-year-olds is worth about £5,000 a year per child. More than that, even for those on universal credit there is help. Universal credit currently covers up to 70% of eligible childcare costs, but from April that will increase to 85%. That is a huge difference, worth £1,368 per year for every child.

Graham Evans: I am most grateful for that intervention; my hon. Friend makes a very powerful point. As I have said, jobcentre staff say that the changes that the Government have introduced to simplify welfare and benefits, and the incentive to work, enable those people who are unemployed to get into work quickly. And for long-term unemployed people who have been on benefits for many years, there are now clear incentives to get into work, because they will keep more of the money they earn; universal credit enables them to keep more of what they earn.

Nick Thomas-Symonds (Torfaen) (Lab): It has emerged clearly from this discussion that there needs to be greater awareness of the cuts to the universal credit work

13 Jan 2016 : Column 334WH

allowance that are coming in this April. Let me just give the example of a single parent—say, a single mother—with one or more children. That allowance will be halved from April from £8,808 to £4,764, which is a reduction of £4,044. In cash terms, that working mother will lose £2,628 from this April. How on earth is that an incentive to work?

Graham Evans: We have to look at the whole scheme. We have to look at the fairness to those in receipt of welfare and benefits, but what we never hear about from Labour Members is that the scheme has to be fair to the people who pay for it, who are the hard-working taxpayers. If we look at people who are working—[Interruption.] I know it is controversial to talk about the people who actually contribute and pay for welfare, but we have to look at the people who make the decisions to work hard and work full-time. The examples that people always look at are of people who work part-time, and their income is topped up. Well, we have to look at the decisions of people who work hard every day. They have to work full-time—work, work—and make those decisions and pay taxes, which go into the welfare system.

Several hon. Members rose—

Graham Evans: I will give way to the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) and then I want to make some progress.

Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): I intend to make a speech, and I appreciate the hon. Gentleman’s courtesy in giving way. I gently say to him—this is important in a debate on universal credit—that Britain is not divided into two groups of people: those who pay taxes and those who receive welfare benefits. It is a lot more complicated than that. The point of universal credit was actually to allow a seamless transition between the two to support people. The point of this debate should be to point out that that transition is not working so far in the initial roll-out of universal credit. That is where the attention needs to lie in a discussion such as this.

Graham Evans: As always, the hon. Gentleman makes a powerful point. I am not saying that the system is perfect. Under the Labour Government, the welfare system was very complicated. In the previous Parliament, the Government tried to make it simpler and fairer for people in receipt of welfare while also making it fairer for the people who pay for it—hard-working taxpayers. Not for one minute am I saying that the system is perfect, but the people who work in Jobcentre Plus tell me that universal credit makes it a lot easier and simpler for them to help people, particularly the long-term unemployed, to get into work. That is the evidence in my constituency.

Jim Shannon (Strangford) (DUP): Will the hon. Gentleman give way?

Graham Evans: May I make a bit of progress first? I have actually got a speech here.

Everyone with the ability to work should be given the support and opportunity to do so. The previous system wrote too many people off for too long, and too many people were left in a cycle of welfare. The point behind

13 Jan 2016 : Column 335WH

the reforms is to break that cycle. The roll-out of universal credit will fundamentally transform the welfare benefits system in Britain and the north-west, making 3 million people better off and bringing £33 billion in economic benefits to society. Universal credit will simplify and streamline the welfare system, improve work incentives, tackle poverty among low-income families and reduce the scope for error and fraud.

The hon. Member for St Helens South and Whiston gave some powerful examples. I am not saying that errors do not happen; of course they do. Things are not perfect, but other nations around the world are looking at the welfare reforms that the previous Government introduced and are considering doing the same. Since the introduction of universal credit, unemployment in the north-west has fallen by 50,000—more than 30%. Unemployment in my constituency has more than halved in the same period. While that fall cannot be solely attributed to universal credit, its roll-out has had a part to play in that success, and it will continue to play a major part in entrenching that success as the roll-out continues.

Jim Shannon: The hon. Gentleman is making powerful points, but I am sure that he recognises the concerns of those of us on this side of the Chamber. Government Members may share those concerns, to be fair. Society is marked by its attitude to those on low incomes and the less well-off. In this House, we have a duty to them as well as to taxpayers, who provide income. Does he accept that universal credit is causing undue delays for many of my constituents and those of other Members in the Chamber? There is a knock-on effect on those receiving benefit with the changes to their income tax, tax credits and housing benefit. Some people are without money for periods of seven, eight, nine or even 10 weeks. There has to be something wrong with a system that cannot respond to the needs of those on low incomes when they need it most.

Graham Evans: I am most grateful to the hon. Gentleman. There is a lot of evidence that delays are there, and those delays are unacceptable for the individuals concerned. I will not attempt to defend that. The system is not perfect, but any individual cases should be brought perhaps to the attention of the Member of Parliament, but certainly to the attention of Jobcentre Plus and the benefits agency. Those cases should be looked into and investigated.

People claiming universal credit are 13% more likely to be in work than people claiming jobseeker’s allowance. They are earning more money and are more willing to take a job. One constituent of mine, a hairdresser, was complaining. She said, “At this time of year, I usually get a rebate on income tax, but because I now have a far better personal allowance, I do not have that problem.” She is keeping more of her hard-earned money. That is what the Government are helping the lowest-paid to do.

Employment has been the Government’s real success. A thousand jobs were created each and every day during the last Parliament. That represents 2 million jobs over that period. The Office for Budget Responsibility predicts that a further million jobs will be created over the next five years. This country is the economic powerhouse of Europe. Yorkshire is creating more jobs than France,

13 Jan 2016 : Column 336WH

and that is why so many people want to come here. We have good quality, well-paid jobs, and the living wage is being introduced. We have a far better working environment than many other countries in the European Union. That all indicates just how successful the Government have been at getting people off benefits and back into work. There are so many opportunities in all our communities, and it is important that we expose those opportunities to those looking for work.

Crucial to the Government’s success has been the support towards childcare costs for parents, as my hon. Friend the Member for Congleton (Fiona Bruce) pointed out. Under universal credit, there is additional cover for childcare costs for parents, with up to 70% of childcare costs covered regardless of hours worked. That will be increased to 85% this year, with a monthly limit of £646 for one child and more than £1,000 for two or more children, helping more parents into work. When my children were younger, I remember Mrs Evans saying, “It is pointless me going back to work because of the childcare costs.” I know that the cover for childcare costs is an important step forward in helping working mums to work longer and keep more of their money.

The ethos of “It pays to work” is built into the DNA of the Government’s reforms, particularly universal credit. I have no doubt that as universal credit is rolled out further, we will continue to see more and more people getting back into work. The hon. Member for St Helens South and Whiston referred to the region as a guinea pig, but I am comfortable and proud that the north-west has led the way. I was particularly pleased when universal credit started in my jobcentres in Weaver Vale, because it made a massive difference. I pay tribute to the hard-working staff at Runcorn and Northwich jobcentres for the fantastic work they do helping people back into employment. They are a great example of best practice, and their hard work was recognised by the Secretary of State for Work and Pensions when he visited the jobcentre in Northwich at the end of last year. He gave the staff an award for the number of people they had helped back into work. The staff at Northwich jobcentre have told me that the introduction of universal credit has made their job easier.

A lot of people come into Weaver Vale to work. As the MP, I am puzzled why people travel great distances to work in my constituency yet I still have unemployed people. One of my challenges is to get my constituents to take the jobs that are virtually on their doorstep. That is why, when I became the MP, I started my jobs and apprenticeship fairs. The fifth will take place next month. The first time I did it, there were a lot of unemployed people, but that number has halved over the past four or five years. It is the harder-to-reach people who are left. The companies that come to my jobs fairs are fine-tuning their job offers for people who perhaps have not been in work for a long, long time.

I was most privileged to have the John Lewis Partnership come into Northwich. I am sure Members will agree that Waitrose is a fantastic organisation. When it came, it said, “We will guarantee that 30% of interviews will be for local people.” That was only an interview, not a job, but it was so impressed with the calibre and the quality of the interviewees that it ended up with more than 50% of its employees being local people. Some of those people had been long-term employed, but Jobcentre Plus had worked with the local authority and Mid Cheshire

13 Jan 2016 : Column 337WH

College, training the people for job interviews, CV filling out and what retail employers are looking for. That was a great example of organisations working together to get the long-term unemployed working for the great company that is the John Lewis Partnership. That 50% figure is an achievement of which we can be proud. The reforms are transforming the lives of some of the poorest families in our communities and giving people the skills and the opportunity to get on in life and stand on their own two feet.

I am keen to move Weaver Vale—indeed, Great Britain —from a low-wage, high-tax, high-welfare economy to a higher-wage, lower-tax, lower-welfare country. I support the Government’s reforms in welfare and universal credit. The system is not perfect, but it is far better than that attempted by the previous Government. I believe it is working, as proved by the reduction in unemployment, the growth in wages and the quality of the jobs now available in this country.

Mr David Nuttall (in the Chair): Will people who wish to catch my eye please stand?

10 am

Yvonne Fovargue (Makerfield) (Lab): It is a pleasure to serve under your chairmanship, Mr Nuttall. I congratulate my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) on the eloquent way in which she put the concerns of her constituents—indeed, all our constituents—about universal credit, particularly the changes to the working allowance, which will disadvantage working people. That bears saying once more. Such people are taxpayers. There are not two groups—people who pay tax and people who get benefits—because people move in and out. They pay tax and they deserve support, but they will lose money. Some 20,000 people working full time in my constituency will lose money by 2020. That is appalling.

However, as I represent a pathfinder authority, I want to move on to the difficulties caused by the universal credit roll-out and the lessons we can learn to make sure that it goes more smoothly in the rest of the country. Call me cynical, but I worked in the Citizens Advice Bureau from 1986 and I saw the change from supplementary benefit to income support. We now have universal credit. The aim was always to simplify, not to make things more complicated. The basic fact is that people’s lives are not simple. Lives are complicated and a system has to be devised that deals with the complications and issues that people have at different times of their lives. Certain problems with universal credit have been highlighted in the roll-out, such as the mismatch in budgeting periods and the six-week universal credit waiting period. I take issue with what the hon. Member for Weaver Vale (Graham Evans) said about everyone who is in work being paid monthly. In fact, only half of low-paid workers are paid monthly. Many are paid weekly or fortnightly, so they do not have a cushion to rely on when they first claim universal credit. Anyone who is paid weekly will have one week’s money to manage on for five or six weeks.

There is some difficulty in claiming advance payments, and people are loth to do so. We have seen a rise in debt of 42% over the past six months. People go to payday lenders and suchlike to cover that period of time. There are other delays, without the additional delays in receiving

13 Jan 2016 : Column 338WH

payments. According to the Citizens Advice report, three in 10 have experienced a delay of more than a week beyond the standard five weeks. One in 10 wait more than nine weeks and some wait four months, owing to administrative problems. I accept that things go wrong, but we can look at what happens when things go wrong and at how we can improve that for people.

Confusion about the council tax reduction needs to be looked at, but the major effect of delayed payments has been the increased use of food banks. My local food bank, the Brick, has reported that the majority of people visit because of sanctions and waiting for universal credit—that includes people who are in work. That is a key finding of the survey, which found that 80% have difficulty paying essential household bills such as rent and utilities during these periods. Wigan and Leigh Homes has said that rent arrears have gone up since universal credit came in. People do not realise that they are getting all their money, which is another issue. Many people have been pushed into debt simply because of universal credit.

My local citizens advice bureau reports a much greater level of debt among universal credit claimants compared with the claimants of the past legacy benefits. Some 63% of people say that they have difficulty buying food and feeding their families—a basic human need—which means that the rise in food banks is related in some way to universal credit. I do not think that that can be denied.

I remember claiming a benefit when my husband walked out on me and I had a young child. The whole situation was appalling. I went to the Benefits Agency and felt pretty bad at having to claim benefits. If I had had to go to a food bank as well to feed my family, how would that have incentivised me at that particular period in time to seek work? I was fortunate. I managed to find work within three months, but if I had had to rely on a food bank and wonder where the next meal was coming from for me and my daughter, I am not sure I would have been able to concentrate as much on finding work.

A claimant in my constituency went to my local CAB because they were sanctioned for hundreds of days—not a short period—because they were passed backwards and forwards between jobseeker’s allowance and employment and support allowance. Both teams said my constituent was not eligible for benefit. Ultimately, that person received £4,000 in backdated benefits, and universal credit was put back into regular payment. It is very nice that they got £4,000 in backdated benefits, but how on earth did they manage to feed their family during the time when they were owed £4,000 by the Government?

We need a way to resolve such problems. I would like a universal credit claimant champion, as recommended by Citizens Advice—someone who can look at difficult cases and take responsibility for them. Part of the problem is the fact that no one takes responsibility and people are passed back and to. I do not know about other hon. Members, but I have certainly seen an increase in the number of people coming to my surgeries about universal credit problems since we became a pathfinder. They have to go to their MP because we have a helpline, but advice agencies should have a dedicated helpline. I want to plead for extra funding for advice agencies. Since the changes to legal aid in 2010 when welfare benefits were no longer seen as a legally aidable necessity,

13 Jan 2016 : Column 339WH

less advice has been available from such agencies. Indeed, welfare benefits specialists are having to find other work. We are losing our expertise.

We should have a review before the full roll-out to make sure that when things go wrong, they are quickly resolved and we do not get into a situation in which people are paid huge sums of money backdated, but wonder how they live in the meantime.

The helpline has an 0345 number, which is charged at a fairly high rate on prepaid mobile phones. Constituents have told me that they have run out of credit using their mobile phones to ring an 0345 number, because they have been passed back and to. As I have said before, we need a local number. There should be a freephone number. There should be more phone lines available in offices. Freephone numbers should be available so that people can use the few phone boxes that are available to ring the universal credit number.

Mr Nigel Evans (Ribble Valley) (Con): I fully accept what the hon. Lady says. It is absolutely right that we should have a system whereby people are not penalised for phoning to get information or assistance. Perhaps a system should be set up where the person is able to use a freephone number. If not, perhaps they could send an email and be called back free of charge. I do not believe people should be penalised.

Yvonne Fovargue: I agree, but, as for sending emails, the local authority did a survey to see how many people in Wigan use the internet regularly and found that 30% have never accessed or even looked at the internet. We need to think about those people. When we look at digital by default as a way of claiming, we need to provide more help for people to claim in other ways and not penalise them with a delay.

Graham Evans: The hon. Lady is making powerful points and I do not disagree with a lot of what she is saying. My hon. Friend the Member for Ribble Valley (Mr Evans) also just made a very good point. On digital by default, when I left school there were no computers. I have had to learn how to use computers throughout my life, so I know how difficult it is for people of a certain age to gain access to the internet. Even now, I am not perfect—my children are far better. Does the hon. Lady agree that, in the 21st century, if someone is unemployed and looking for a job but is not very good with the internet and computers, they will not find many jobs in which some form of computer use would not be required at a basic level? It may be that 30% of the hon. Lady’s constituents have never accessed the internet, but as much help as possible should be given to that 30% to enable them to apply for jobs, because I am pretty sure that computers will be involved.

Yvonne Fovargue: I do not disagree, but in the meantime people should not be penalised by having to seek help to claim the universal credit benefit because it is digital by default. If they want help to claim, there are agencies that can help, but there is often a delay in receiving an appointment for that. People should not be penalised because they have to wait to claim universal credit simply because they do not have access to a computer. That is another issue to look at.

13 Jan 2016 : Column 340WH

When claims are refused, people are sometimes confused about why. Again, a helpline number—an 0800 number—would be extremely helpful for those people. When it gets complicated, there should be a named person to help them. I do not think anyone would disagree with the idea that we want to make the system as simple as possible. We know that people’s lives are complicated and that they move in and out of work, particularly those in low-paid work. Anything that makes the transition more simple should be looked at carefully.

Fiona Bruce: The hon. Lady has made a number of valid points, and I have great respect for her. We worked together as councillors on Warrington Borough Council and I know that she has in-depth knowledge of the subject, beyond that of many Members, but as I understand it, as part of universal credit a named personal contact is now being offered to help individuals to seek work, as well as to ensure that they access the right benefits.

Yvonne Fovargue: Although there is someone available to help them to seek work, I am looking for someone to help when things go wrong—someone with a detailed understanding of the universal credit system, not someone who perhaps has more knowledge of the work environment. People need someone to talk to about the complexities of the universal credit system and how it relates to council tax benefits and local authorities—all the major issues—rather than simply a work adviser.

Trying to make things simpler with universal credit is a laudable aim. We need to look at what has happened in the pilots and how the system can be made to work. I cannot finish without also saying that we need to look at how universal credit can incentivise people to work, which is certainly not done by cutting the work allowance and giving people less incentive to find work.

10.13 am

Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op): It is a pleasure to see a fellow north-west MP in the Chair for this important debate, Mr Nuttall. I congratulate my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) on securing the debate, and indeed on the impressive work she has done since being elected to Parliament. St Helens is a place with similar issues to my borough, Tameside, so it is excellent that she is raising them.

My hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) is also present. She, too, represents Tameside, which was a universal credit pathfinder area, so we were one of the first parts of the country to experience some of the problems related to it. No matter what political perspective a person has going into the debate on welfare rights and the welfare system, it is important to listen to relevant experience, where it exists, of how universal credit has functioned so far. I should say at the outset that I completely support the goal of simplifying our welfare system—I do not think anyone in this country would not want that.

Like many Members, I use the Child Poverty Action Group handbook to help constituents when they come to me with problems. The handbook is sometimes referred to as the bible of welfare rights; indeed, it is the same size and written in a similar font as the Bible. That indicates the complexity of the system, so of course people should be trying to simplify it. However, as my

13 Jan 2016 : Column 341WH

hon. Friend the Member for Makerfield (Yvonne Fovargue) said, we cannot get away from the reality that many people lead complex lives and have complex needs. The system must function in a way that gives them the support they need.

A number of the issues that come up at my constituency surgery that I wanted to raise have already been mentioned, but they are so important that I want to reiterate why they are key to making the system work properly. The first one is the first payment that people get. In my experience, there are immediate problems for people when they try to access universal credit because of how the system is designed. It is not a teething problem with the roll-out, but a structural flaw in how universal credit has been created. A lot of people are immediately put into a position where they struggle to afford food and heating. That simply does not seem to tally with the goal of supporting people into and out of the workplace. Instead of giving them a professional and efficient service when they need it, it often robs them of their dignity and puts them into crisis.

Like other Members present, at times of my life I have had to access support from the welfare system, particularly the tax credit system, which is almost always the case for those who have children at quite a young age. It did not lead me into a life of welfare dependency—it arguably led me to a worse life, as I ended up here in the House of Commons. Nevertheless, that is an important point, because so much of the Government’s rhetoric is based on the assumption that there are two sets of people in the country: an underclass of welfare recipients who must be punished and whipped back into the workplace, and everyone else who suffers from having to pay for the system. If that is the Government’s mindset going into the designing of a welfare benefit, the welfare system will simply never be designed in an appropriate fashion to meet the objectives of the people who have been described in this debate.

Mr Nigel Evans: I am glad that the hon. Gentleman has brought up the question of whether that is what the Government intend, because the answer is clearly no. The greatest dignity that we can give to anyone is the dignity of work and employment. That is the main thrust of what the Government want to see. Getting people off benefits and into full-time work will provide them with dignity and give their children a role model to follow.

Jonathan Reynolds: I do not doubt the hon. Gentleman’s motivation. Before the debate we exchanged some comments about that sense of there being a group of taxpayers paying for the welfare system and a group of people in receipt of welfare benefits. That is not the way to design a welfare system. We cannot do it in a way that divides the country so simply into those arbitrary classifications. Indeed, if we do that, it is impossible to design an effective system.

I mentioned the issues relating to the first universal credit payment. People have to wait a long time, because it is designed to be paid five to six weeks in arrears. As the hon. Member for Weaver Vale (Graham Evans) said in an intervention, the assumption is that they are in the workplace and receiving a monthly salary in arrears, so they will have that support before receiving universal credit. I say this completely genuinely: that is not how the economy of my constituency works. A great many

13 Jan 2016 : Column 342WH

people are still paid weekly or fortnightly. A lot of people have different levels of income week by week because of zero-hours contracts. That does not seem to have been considered in the level of detail required to design how and when people will receive the support that they need.

Delays occur in any bureaucratic system, but there is an even bigger structural flaw in universal credit that I have heard about several times in my constituency surgeries. If someone applies for universal credit on the wrong day—perhaps one or two days before they really “should” apply; in other words, when they have lost their job but before they have received their final pay cheque from their former employer—the system becomes disastrous for them. We must bear in mind that a lot of people, on finding out that they are going to be made redundant, would go to the jobcentre to look at the available support. If they apply for universal credit but receive a further pay cheque from their employer, they will wait not five to six weeks but 10 to 11. That is an enormous problem that must be looked at. If that happens—if someone has to know exactly when to apply for the support to which they are entitled—it will go far beyond the current level of complexity. That would have to be sorted out before any national roll-out.

I have raised those points because we have to find a way to get a supportive system that copes with people going into and out of the workplace—regular or temporary work—in a way that does not completely reset the system and cause all kinds of problems if they then go back into work. That is what I mean when I say that we should not split the country with an arbitrary classification of those in work and those out of work and receiving welfare benefits.

Whenever problems with universal credit are raised, the Government say that advance payments can sort out all the problems, whether with housing arrears, heating or food. That is first question I ask people who come to see me with problems with universal credit, and a lot of them tell me that they have not been told about the advance payments system. I do not know what the experience of other hon. Members is, but advance payments do not seem to be programmed into the initial assessment. If a person does not know about the advance payment system, they have an even bigger problem, because they cannot claim an advance payment if they are a number of days past their initial assessment. If people accessing unemployment benefits for the first time face a confusing system that does not give them the funding they are entitled to, given that they have paid into the system, and that prevents them from getting back into the workplace, that is not an improvement on the current system. There has been a lot of party political advertising of the employment rate, the Government’s successes, childcare and all that, but we need to look at these genuine, serious problems.

Despite the objective of simplifying the system, the roll-out would have been disastrous in my area if it were not for our welfare rights advisers. To my mind, the staff of Tameside citizens advice bureau are absolute heroes. The reality is that that kind of support is being stripped from all communities. Law centres and citizens advice bureaux are closing. If the system is to work, we have got to give people impartial, fair advice. The hon. Member for Ribble Valley (Mr Evans) made a fair comment about how people can get in touch with

13 Jan 2016 : Column 343WH

welfare advisers. That is important, and it is sad to see welfare advisers going at a time when people need them.

Universal credit is a big change, and if people do not have support to access it properly, their perception of it will be negative. We have to ensure that that is not the case. From my casework and experience, from what is happening in other parts of the country and from people’s testimonies, my overwhelming impression is that, despite the scale of the bureaucratic challenge of moving to universal credit, we are not tackling the big problems of our social security system. We are not providing sufficient support for people who have lost their job for the very first time—particularly during the global finance crisis—and who never thought they would be unemployed. When they find out what their national insurance contributions will buy, they are often frankly disgusted at the level of support available to them.

We are not tackling the sanctions, the conditionality and the job search criteria. Frankly, I think we are treating a lot of people like children and robbing them of their dignity. We are not giving them what they should reasonably expect when they access the welfare system. Most of all, the system is unable to cope with the flexible working patterns that are so common in our economy. Many people do not have jobs for life; often, they do not even have jobs that last for years. The system has to reflect that, but I do not think those things have been priced in. Despite the bureaucracy and our overall level of spending on the social security system, people in my constituency have been left genuinely destitute and reliant on charity and food banks to survive. That cannot be right. Given the resources we put into the system, there has to be a better way to do it.

I think we need an even more radical approach. We should look to other countries for best practice. Concepts such as basic income do not lead to a taper problem and do not disincentivise people from going back into the workplace; rather, people are supported in different stages of their lives and everybody gets something out of the system for what they pay into it. That is the direction in which have got to be looking. We need something more radical than universal credit. Universal credit, if it worked properly, would be welcome, but at the moment there are huge teething and design problems. Even once those problems are sorted, it will not tackle the big problems of the welfare system. Let us sort those problems out, but let us not end the conversation about welfare reform here. Let us address the challenges and create a system that truly works for everybody.

Mr David Nuttall (in the Chair): We now move to the winding-up speeches. I gently remind the shadow Minister, the Minister and the Scottish National party spokesman to leave a couple of minutes at the end of the debate before 11 o’clock for the hon. Member for St Helens South and Whiston (Marie Rimmer) to wind up.

10.24 am

Neil Gray (Airdrie and Shotts) (SNP): It is a pleasure to contribute to this important debate under your chairmanship, Mr Nuttall. I pay tribute to the hon. Member for St Helens South and Whiston (Marie Rimmer) for securing this debate. It is primarily focused on the north-west of England, but as it concerns the roll-out of

13 Jan 2016 : Column 344WH

universal credit across the isles, the implications of what is said this morning stretch much further than the north-west. I congratulate her on her very good speech. She rightly did not shirk the opportunity to give the Government a kicking on their record on this matter. I pay tribute to other hon. Members who contributed. In particular, the hon. Member for Makerfield (Yvonne Fovargue) delivered a very powerful speech.

There are a great many issues at play around the changes to universal credit and the roll-out in the north-west and further afield. SNP Members are fundamentally concerned about the removal of the work allowance, which underpins the potential success of universal credit and the aim to support people into work and make work pay. We are also concerned about the monthly payment regime. Support for housing benefit recipients will not go directly to landlords, and payments will be made to households, rather than individuals.

Graham Evans: Will the hon. Gentleman give way?

Neil Gray: I will make some progress; I am just starting.

Pilot projects across the country have shown that those areas of concern are problematic. That has been highlighted by a raft of third-sector organisations in reports on this subject. In principle, universal credit sounds tempting. We are told that it is a smooth, streamlined system to assist low-income families. However, as has been emphasised today, in reality it is fraught with flaws, and low-income families are the casualties of the Tories’ poor economic choices and ideologically driven cuts. The ineffective and costly roll-out of the system to date highlights the need for an urgent rethink of these draconian policies.

Universal credit was first introduced as a pathfinder in Ashton-under-Lyne in April 2013. New claims were taken from single unemployed people who satisfied the gateway conditions. The pathfinder was then extended to three other areas in the north-west—Wigan, Warrington and Oldham—in July 2013, and in the summer of 2014 universal credit was expanded to a further 29 areas in the north-west for single people and couples who satisfied the gateway conditions. After a relaxation of the constraints on single people claiming between September and December 2014, universal credit was expanded to cover all parts of the north-west of England. New claims from families with children have been accepted in some areas, and since last January new claims from families with children have been accepted throughout the north-west.

The north-west was the first area in which universal credit was rolled out to all jobcentres. Of the 155,568 claimants at mid-November 2015, 77,378 were in the north-west, and of those, 26,521 were in employment and 50,855 were not in employment.

Graham Evans: May I go back to a point that the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) made about treating people like children? The hon. Member for Airdrie and Shotts (Neil Gray) mentioned paying housing benefit directly to the landlord. Are we not treating people like children if we do not think they are able to pay their housing benefit to their landlords? Surely people in receipt of benefits are perfectly capable of paying their landlords.

13 Jan 2016 : Column 345WH

Neil Gray: Actually, I do not accept that.

Graham Evans: It is treating them like children.

Neil Gray: It is not treating people like children. I totally disagree with that. People in such circumstances often live chaotic lives. Sometimes, although not always, they do not wish to have the responsibility for managing that extra level of financial responsibility. A great many people in my constituency have told me that they would far rather know that they have a roof over their head that is secure regardless of what happens elsewhere, and that they would rather see their benefit paid directly to their landlord. People should be given the choice over that matter, and at the moment they are not. It is being paid to them, and they are being given the responsibility, which is not always welcome.

Jonathan Reynolds: I want to clarify for the record that my comment about treating people like children referred to people who have worked for 20 or 30 years and are forced to fill in a graph to show how many jobs they have applied for that day and that week. I do not think that is an appropriate way of treating people who have been in work for a long time and have lost their job; they should be treated with respect and dignity. On the point about paying housing benefit directly to landlords, I believe that there should be a choice. If people want to manage their money themselves, that is fine. There has been a huge increase in housing arrears in every area in which universal credit has been rolled out, which causes huge problems for everybody else because it has to be covered in some way. If that can be alleviated by paying housing benefit directly to landlords, I see no reason why that option should not be available to people.

Neil Gray: I appreciate the hon. Gentleman’s intervention.

The New Policy Institute’s report “The rise of sanctioning in Great Britain”, which was mentioned by the hon. Member for St Helens South and Whiston, states:

“The expansion of conditionality under Universal Credit could see a substantial increase in sanctions: if sanctioning occurred at the same rate as for JSA claimants, then the number could almost double, with an additional 600,000 sanctions.”

That is very concerning. The Institute for Public Policy Research, an independent think-thank, found that low-income families in Scotland will face an £800 a year cut in their income by 2020 following the UK Government’s cuts while the richest 40% will see their incomes rise as a result of tax cuts.

A number of National Audit Office reports have come to damning conclusions about the ongoing universal credit transition, highlighting the early setbacks, missed targets and overspending. The numbers simply do not lie: 17,850 claimants were on universal credit in October 2014, but the Government had planned to have 500,000 claimants on universal credit by April this year and 7 million by December 2019. Not only does that show that the Government are completely missing their own targets, but they are spending huge budgets, wasting vital funds that could be better spent supporting poor families who are struggling to make ends meet. Indeed, the NAO published a report in May 2015 entitled “Welfare reform—lessons learned”. Speaking about the report, Amyas Morse, head of the NAO, said that the DWP,

“has had to learn some hard lessons with significant financial and human costs.”

13 Jan 2016 : Column 346WH

Fiona Bruce: The hon. Gentleman has reeled off reams of statistics during his speech, but the key statistic is the legacy of the previous Labour Government: nearly one in five households in our country had no one working at all. That in no way brought dignity to those households, those families or their communities. Should we not be addressing that statistic as a priority?

Neil Gray: Where people are capable of working, it is right that we should encourage them to do so. However, the problem with the changes that the Government are implementing through universal credit is that they are removing the work allowance, which is the only incentive to work in universal credit. It underpins the incentive to get into work and to remain there. Taking that away removes the premise that work should pay, which is a sad situation.

The DWP has said that universal credit will be simpler for claimants and will be treated like a wage for individuals, readying them for work. In reality, there are complex problems that will ultimately see less money in people’s pockets and more difficulties accessing adequate financial support. Analysis of the autumn statement by the IFS found that the benefit system is still much less generous in the long run, pointing out that universal credit now represents an additional cut on top of other changes, including the cut to benefit entitlement, of £3.7 billion a year in the long run. Some 4.5 million working families will be affected by the introduction of universal credit, and 2.6 million will lose an average of £1,600 a year.

This is where I must disagree with the hon. Member for Weaver Vale (Graham Evans) and where he missed the point in his contribution. People are being encouraged into work, which is right for those who can work, but removing the work allowance aspect of universal credit takes away the only incentive to work. He also made the point that the social security system needs to be fair for those who pay for it, but he perhaps forgets that those in receipt of the universal credit work allowance are in work.

Graham Evans: They are taxpayers.

Neil Gray: Absolutely. They are taxpayers.

Some 1.8 million non-working families will be affected by the introduction of universal credit, and 1.2 million families will lose an average of £1,000 a year. Over recent months, the focus of much discussion has been on tax credits, but changes to universal credit will also have profound effects. The Government’s so-called U-turn on tax credits is nothing more than a delay tactic, with the pain to be felt in the next few years under universal credit. Support for working households on low incomes getting universal credit was also reduced in the summer Budget. Ian Mulheirn of Oxford Economics said that,

“this may be a U-turn in April 2016, but it doesn’t look like a U-turn by 2020.”

In conclusion, the Scottish people voted in May 2015 for an end to austerity when they voted for the SNP. They deserve the leadership they voted for and not to face the social security storm that the Tories are brewing. The failures of the UK Government to give us full power over universal credit have left our country picking up the tab for the Tories’ poor economic choices and shoddy governance once again.

13 Jan 2016 : Column 347WH

10.34 am

Nick Thomas-Symonds (Torfaen) (Lab): It is a pleasure to serve under your chairmanship, Mr Nuttall. I warmly compliment my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) both on securing the debate and on the dignified, cogent and passionate way in which she put her case this morning.

The hon. Member for Weaver Vale (Graham Evans) spoke well about the staff to whom he had spoken at a Jobcentre Plus office in his constituency. My hon. Friend the Member for Makerfield (Yvonne Fovargue) made an excellent speech, drawing on her experience at Citizens Advice in the 1980s and speaking powerfully about the sad explosion in the number of food banks in this country since 2010.

I am grateful to my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) for his speech, in which he spoke well about the complexity of the modern economy. He made a powerful point about our need to draw on experience, and any well thought out, coherent and simple policy is to be welcomed. I may even give him a shorter book to read in due course. There were also interventions from my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey) and the hon. Members for Congleton (Fiona Bruce), for Cheadle (Mary Robinson), for Bolton West (Chris Green), for Strangford (Jim Shannon) and for Ribble Valley (Mr Evans).

Much of today’s discussion has been about the language with which the debate is conducted, and I am extremely concerned about the language framework that the Government use. The Chancellor of the Exchequer said on the “Today” programme on Monday 8 October 2012:

“It is unfair that people listening to this programme going out to work see the neighbour next door with the blinds down because they are on benefits.”

Those are his actual words. He presumably thinks that that type of stuff is popular at the Tory conference. The real problem with that sort of language is how divisive it is. There is no sense that the person behind those blinds might be vulnerable or disabled. The Minister has an opportunity today to condemn such divisive language, and I sincerely hope that she feels able to do so.

Even if one accepts the abysmal logic, which I do not, the real problem is that the Chancellor is so lost in tactical mazes of his own construction that he is actually on the wrong side of his own dividing lines. He is attempting to separate people into the workers and the non-workers—that is precisely what he was trying to do in that quote. However, what we saw with the cuts to tax credits, which the Chancellor eventually caved in on, we are also seeing with the cuts to the universal credit work allowance from this April.

Mr Nigel Evans: What was appalling under the previous Labour Government was the high level of unemployment, which meant more people spending time with the blinds down. Under this Government, employment has reached record levels, unemployment has dropped, and far more people are earning more money than ever before. Is that not bringing dignity to the British people?

Nick Thomas-Symonds: I will come to people earning more than ever before in a moment. I make no apology for a Government who introduced the national minimum

13 Jan 2016 : Column 348WH

wage or for wage growth in the Labour years. This decade risks becoming the lost Tory decade, with wage growth lower than at any point since the 1920s.

The hon. Gentleman wants to talk about money in people’s pockets. I have already spoken about the effects of the cuts to the universal credit work allowance on single parents from this April, so shall I use some other specific examples? Take a couple, living and working together, one or both of whom has limited capacity to work as they are disabled. For them, the work allowance will be cut from £7,700 to £4,700, a loss in income of £3,000. That is for people who are actually in work. To take another example, single individuals will essentially lose everything, with a reduction of £1,332, at a net loss to income of £865.

When universal credit is damaging and attacking people in work, it is in danger of undermining the aims that it was set up to achieve. If Government Members do not want to take my word for that, let us take the word of the Social Mobility and Child Poverty Commission’s “State of the nation 2015” policy paper, published on a big date for dumping things just before Christmas, 17 December 2015. The paper is available on the Government website if any Members want to see it. The commission stated:

“The immediate priority must be taking action to ensure that the introduction of Universal Credit does not make families with children who ‘do the right thing’ (in terms of working as much as society expects them to) worse off than they would be under the current system. That means reversing the cuts to Universal Credit work allowances enacted through the Universal Credit (Work Allowance) Amendment Regulations 2015 before they are implemented in April 2016.”

That is what the commission says should be the priority from this April.

Graham Evans: The hon. Gentleman is right to point out that the Labour Government introduced the national minimum wage. I supported that outside this place, as did many of my Conservative colleagues. This Government, however, are introducing a national living wage and—this is the key thing, which is lost on the Opposition—are keen for people to keep more of their own money. That is why the personal allowance has increased, taking the lowest-paid out of income tax altogether. He might remember Gordon Brown’s fiasco with the 10p tax rate, which penalised the lowest-paid workers in the country. The system is complicated, yes, but the underlying mantra is that it always pays to work. Getting low-paid people out of tax altogether is the best way of doing things, so that they keep more of their own money.

Nick Thomas-Symonds: I am interested in history, as the hon. Gentleman might know, but I do not recall the Conservative party in the 20th century supporting a national minimum wage. His personal view might well have been different, but I do not recall his party voting for a national minimum wage—rather, at the 1997 election I remember the Conservatives saying that it would cost jobs. They seem to have changed their position significantly since, which is to be welcomed.

Alec Shelbrooke (Elmet and Rothwell) (Con): Almost 20 years ago.

Nick Thomas-Symonds: If the Parliamentary Private Secretary wishes to intervene, he is welcome to do so.

13 Jan 2016 : Column 349WH

Alec Shelbrooke: If I was allowed to, I would.

Mr David Nuttall (in the Chair): Order.

Nick Thomas-Symonds: Perhaps the hon. Gentleman has special permission—I will take it up with him another time.

Another unfortunate pattern is the Conservative party putting forward various mitigations for its Government’s cuts. The latest one was on 6 January, when the Under-Secretary of State for Justice, the hon. Member for North West Cambridgeshire (Mr Vara), tried to defend the cuts to the work element of the universal credit, saying,

“let us not forget, the fact that every time we fill up our tank with petrol there is a saving of £10 because of the freezing of the fuel duty.—[Official Report, 6 January 2016; Vol. 604, c. 342.]

Back in the 1980s the Conservatives’ answer to the unemployed was, “Get on your bike,” but in 2016 it seems to be, “Fill your car.” That is the level of debate we have reached.

Confidence in the roll-out is another enormous issue, as my hon. Friend the Member for St Helens South and Whiston indicated. Let us not forget what the Secretary of State for Work and Pensions said in a press release on 1 November 2011:

“Over one million people will be claiming Universal Credit by April 2014.”

The actual number reached by November 2015 was 155,568. The hon. Member for Weaver Vale said with delicious understatement that that was not perfect. I have to agree—less than one fifth of the target had been reached. According to the independent Office for Budget Responsibility, the number will not exceed 1 million until April 2018, four years late. Does that not show the situation that we are in today? Given the cuts to the work element of universal credit and the sheer scale of incompetence with the roll-out, are we not in the worst of all worlds, where the Government lack both compassion and competence?

10.44 am

The Minister for Employment (Priti Patel): It is a pleasure to serve under your chairmanship this morning, Mr Nuttall.

I congratulate the hon. Member for St Helens South and Whiston (Marie Rimmer) on securing the debate and on her contribution. I thank all Members present for their good, strong and wide-ranging contributions, including my hon. Friends the Members for Weaver Vale (Graham Evans), for Congleton (Fiona Bruce), for Cheadle (Mary Robinson), for Bolton West (Chris Green) and for Ribble Valley (Mr Evans) and the hon. Members for Stalybridge and Hyde (Jonathan Reynolds) and for Makerfield (Yvonne Fovargue), to name but a few. I hope to cover many of the points they raised.

The debate has been interesting because of its content and the nature and variety of the issues raised. My opening remarks, however, will focus on what the hon. Member for Torfaen (Nick Thomas-Symonds) said. I, too, welcome him to his new role. He rightly highlighted language and its use, which are incredibly important when discussing people, welfare, benefits and access to welfare. However, I do not accept his assessment that the Government use divisive language. I do not see the Government’s focus of ensuring that work always pays and that Britain moves from being a low-wage, high-welfare and high-tax

13 Jan 2016 : Column 350WH

society to being a higher-wage, lower-welfare and lower-tax society as divisive. Nor do I see as divisive the language used by the Prime Minister this week when he announced our life chances strategy, which is to do with this very issue of welfare and transforming people’s lives.

This Government and the Conservative party are focused on helping people with multiple barriers to their life chances, or with difficulties in life, so that they can get back into work or secure their routes to employment, which the debate has touched on. Importantly, we are securing the right kind of opportunities for all individuals. That is the right thing to do and is what all hon. Members seek to do when they are elected as Members of Parliament to represent their constituents.

Fiona Bruce: I am sorry to interrupt the Minister when she is in full flow, as she often is. Will she clarify one point that arose earlier in the debate when the hon. Member for Makerfield (Yvonne Fovargue) spoke about a “named contact”? I confirmed that, under universal credit, as I understood it, a named personal contact will not only act as a work coach, but also, according to the Under-Secretary of State for Disabled People in a debate on 6 January,

“help them to deal with their individual case when they are navigating complicated benefit systems”.—[Official Report, 6 January 2016; Vol. 604, c. 302.]

Will the Minister confirm that the named contact will supply the support necessary for people both to access their benefits and to get into work?

Priti Patel: My hon. Friend is absolutely right. Claimants have access to personalised and dedicated support via a named work coach. Indeed, I have been to many of our jobcentres and sat in on universal credit interviews with claimants and work coaches. There is additional support available for claimants who require help with housing and other benefits, arrears payments or even budgeting.

It is therefore worth highlighting how much our welfare system has moved on, compared with the complex and distorted system that existed previously. Many years ago we had a number of benefits but, fundamentally, universal credit has rolled six benefits into one to streamline our system and to make it less complicated. The more complex a benefits system is, as we saw in the past, the more difficult it becomes to support individuals—they spend more time navigating the system than looking for or being supported into work.

All that goes back to some of the fundamental principles of the universal credit: it can support individuals and families not only in having a job, but in their journey to employment. Once they are in work and achieve sustained employment, they get support to secure long-term employment or to work more hours, which removes the barriers that existed under the previous system.

As we have said, universal credit supports individuals to make progress into work in particular. Yes, people are supported by the wages that they earn and benefits they receive at the same time, but, unlike in previous systems, we do not have the barrier of a 16-hour work requirement that may have caused people to restrict their working in order to avoid losing benefits. That is part of the changes brought in by universal credit, which stays with the claimants when they move into work and gradually reduces as their earnings increase. Therefore, people—in particular those on low incomes—do not lose their benefits all at once.

13 Jan 2016 : Column 351WH

Nick Thomas-Symonds: Lord Freud has said that there will be an automatic movement from tax credits to universal credit in two situations: “repartnering” and a

“new member joining the household”.

Will the Minister confirm that, if someone gets married or has a child, they will be moved from tax credits to universal credit?

Priti Patel: We are clear that people being moved on to universal credit from tax credits will be supported and will not lose out. A fundamental principle of universal credit is that it removes barriers that may have existed and, importantly, it gives people the support they need when they come on to it. That is different from previous systems. It is different from tax credits, for example, which did not provide support for people when they wanted to increase their hours and earnings.

The previous system was fragmented and there was little incentive for people to take up even a few more hours of employment, but under universal credit people can benefit as soon as they start to work. It is a simpler system to understand. It comes back to the point that we have support in our jobcentres to help people to extend their hours of work or, when they are moved on to universal credit, to understand the system and support them.

That is different from what existed before. Under universal credit, no one will have to worry about the Government asking for money back because the real-time information system connects the employer and Her Majesty’s Revenue and Customs on the number of hours worked. That is dramatically different from the situation when tax credits was introduced and millions of low-income families faced uncertainty about owing money back to HMRC at the end of the year. I am sure all Members have dealt with many examples of casework in that area.

I want to come on to the points raised, because I am conscious of time. There is evidence that universal credit is getting people into work and helping them stay in work. We have reviewed universal credit and, as a result of the support that people are given, we see that they spend 50% more time looking for work. We now see more universal credit claimants moving into employment compared with JSA claimants thanks to the focused support they get through their single point of contact, their work coach and other means.

Mr Nigel Evans: Is not the point—surely this helped win us the general election—the message that no one should be better off out of work than in work? With the national living wage and higher thresholds, we have ensured that far more people who are in work will keep more of their money.

Priti Patel: My hon. Friend is absolutely right about people keeping more of the money that they earn rather than going through the process of having more taken away and then recycled through benefits such as tax credits. It is also worth reflecting on the point made by my hon. Friend the Member for Weaver Vale. He mentioned Northwich jobcentre, which has done a great deal of work to support people on universal credit. The award that the Secretary of State gave to staff members there shows how they are supporting people and transforming lives, which is fundamental to the welfare reforms that we are bringing in.

13 Jan 2016 : Column 352WH

Many comments were made about universal credit in terms of the process, the roll-out and delays. I do not agree with some of the assessments and analysis given, and those with reference to the OBR in particular. We are rolling out universal credit as planned. Importantly, we no longer believe in the “big bang” model used in previous systems such as tax credits, which when introduced brought a great deal of chaos to jobcentres and the welfare system. We have adopted a test-and-learn approach to ensure safe and secure delivery and, importantly, to ensure that we can learn from individuals as they go through the process.

We have an enhanced digital service, which makes it clear immediately that a claim has not been progressed and that further information is needed. Jobcentre Plus and work coaches speak well of the system. I have seen it in action, with the immediate way in which data are exchanged and claims are processed. We have faster electronic payments to allow the Department to make payments via BACS on the same day to minimise further delays, because of course people need to be supported.

I do not agree with the comments made about the report from Citizens Advice, because we know that the research for that was based on anecdotal evidence from a small group of current UC claimants—the sample was less than 1%. Even Citizens Advice said that that was not representative of all claimants on universal credit.

We have universal support working alongside universal credit, which offers wraparound support for those who need it. That comes back to the points raised about no two individuals being the same. Situations are different for claimers and no one can count for the life circumstances of individuals, so universal support provides that wraparound support.

Jonathan Reynolds: It sounds a little inconsistent to say that the Government did not want a big bang approach and want to learn from the roll-out, but then the Minister immediately dismissed one of the most useful and authoritative reports on the roll-out in our area. That report includes a number of cases that, based on my constituency surgeries, are spot on in the problems identified.

Priti Patel: We are clear that we have an agile test-and-learn system. That is not a big bang approach. With all due respect to Labour Members, previous Governments went for the big bang approach on welfare systems and there were consequences: I highlight again the tax credits example.

I will wrap up, because I am conscious of time. In terms of incentives and support, from April we are increasing the amount of eligible childcare cost in universal credit to 85%. That will make a remarkable difference to families. Welfare is about much more than just giving people money. It is about removing barriers for individuals, understanding circumstances and giving people the support they need to get on in life.

10.57 am

Marie Rimmer: I am deeply disappointed that the Employment Minister has not taken the debate seriously. Does she not accept that the language used by the Chancellor and indeed the Prime Minister is unacceptable?

13 Jan 2016 : Column 353WH

The trouble is, their words are at odds with the outcomes of the Government’s policies experienced by people in this country. She has not accepted that significant changes will remove people from the transitional protection arrangements. She should look at the Library briefing.

I ask the Minister to stop and think again. I ask her not to implement the cuts to work allowances. She should examine and address the real problems experienced out there in the pilot areas, as outlined so eloquently today.

The cuts in the work allowances remove the incentive to work. Transitional protection is not secure, because it is removed if one person leaves the household. There is more inequality and the dividing line is widening. The experience of people in our communities is worsening. There are examples of that in the report commissioned by the Minister’s Government, produced just a couple of weeks ago. She should read that report.

I ask the Minister to take seriously what is being experienced out there in the community and not to make the mess even worse. We are trying to help to improve roll-out across the country. She must examine and address the inequality and outcomes in the pilot areas before that. She should stop and address the problems, and not cut work allowances. Otherwise, there will surely be an outcry right across the country.

Motion lapsed (Standing Order No. 10(6)).

13 Jan 2016 : Column 354WH

Defence Procurement

11 am

Mr Douglas Carswell (Clacton) (UKIP): I beg to move,

That this House has considered defence procurement.

I am grateful to be having this debate, and I thank the Minister for coming here to discuss a subject that he and I have talked about on a number of occasions.

British defence policy should be exclusively aimed at keeping Britain safe, but is it? Instead of serving the national interest, it too often serves the interests of a cartel of defence contractors. Britain does not get military bang for the taxpayer’s buck. We spend about one tenth of what the United States does on defence, yet we have far less than one tenth of the Americans’ capability—in many areas, we can barely field 1% or 2% of their capability. We are the second-largest defence spender in NATO and the fifth-biggest defence spender in the world, but we are simply not getting value for money.

What is going wrong? The problem is procurement. Major projects routinely come in late and way over budget. To be fair to the Minister, it is not his fault; it is not even the fault of his predecessors. The problems are the culmination of successive Governments’ policies over many decades. Starting perhaps in the 1960s, successive Governments attempted to consolidate the defence-industrial base. They thought consolidation would deliver economies of scale and make the UK defence industry more viable. At a time when deindustrialisation was feared, it was believed that ensuring that different defence suppliers amalgamated and merged into one would somehow make them viable. The problem is that consolidating the supply base in any market means that the seller ends up setting the terms of trade, and so it is in defence.

I have often heard Members of Parliament say that defence inflation is somehow higher than inflation in the rest of the economy. That is often described as a fact of life—somehow inevitable—but why do defence costs and prices rise faster than prices in the rest of the economy? Higher defence inflation is a reflection of problems in the procurement process, where too much money chases too restricted a supply of goods. Restrictions on supply are fundamentally the problem. Procurement is the problem.

Some projects, such as the Nimrod MRA4—we cannot possibly blame the Minister for that fiasco—never get off the ground at all. Despite constant cock-ups, however, the MOD keeps going back to the same contractors; we keep seeing the same pattern of dependence on a handful of contractors and bad value for money. Yet, the same contractors keep getting the lion’s share of the defence budget.

The MOD should be sourcing the best equipment possible to keep our armed forces and our country safe. Too often, unfortunately, procurement ends up being protectionist. Protectionist procurement produces huge inefficiencies; it means less competition—it cuts competition —and as we know, competition drives down costs and raises standards. Without competition, contractors ended up being rewarded for failure. Protectionist procurement means we spend years designing and building new equipment from scratch, instead of buying cheaper, better, readily available off-the-shelf alternatives.

13 Jan 2016 : Column 355WH

Jim Shannon (Strangford) (DUP): I thank the hon. Gentleman for giving way, and it is good to see the Minister in his place. I look forward to a very positive response from him, because we have discussed this matter before. The hon. Gentleman is right. Defence is very important to our economy in Northern Ireland, where it provides high-tech, skilled jobs for the workforce. It is important that defence procurement is equally shared across the whole United Kingdom of Great Britain and Northern Ireland, and that regions such as mine can receive the benefit. If that is done right, we all benefit.

Mr Carswell: The hon. Gentleman makes a powerful point. I have to say that I am a little nervous about looking at the defence budget through the prism of what it means for jobs. Clearly that is important, but the defence budget’s primary purpose is surely not to act as some sort of Keynesian demand stimulus for a regional economy, but to make sure that our armed forces have the equipment they need to defeat our enemies and keep us safe.

Jim Shannon: We already have established companies in Northern Ireland that deliver the best and give value for money. The point I am trying to make is that they could do more if defence procurement was regionally spread.

Mr Carswell: I agree. If we allocated the defence budget on the basis of value for money, I am sure companies in Northern Ireland would get an enhanced share. However, if we create a system where public money is allocated on the basis of something other than value for money, we open the door—the revolving door—to lobbying and all sorts of nefarious influences. Not only is that bad in itself, but it has negative consequences in terms of giving us value for money as part of what will, by definition, always be a finite budget.

Those in the defence establishment will claim that providing Britain’s defence protection base is a strategic industry, and of course our defence industry is a strategic industry. However, they seek to justify giving privileged contractors the privileges they get on the grounds that that maintains our defence industry and that it is critical to our national security. However, let us assess that argument a little further.

The idea that Britain is self-sufficient in defence production is a myth. We need to import defence equipment and materiel. We did so throughout the last century, and it is thanks to our ability to do so that we won wars we would not have otherwise won. In fact, during the Napoleonic wars, we imported materiel and equipment from overseas through Harwich, near my constituency, to ensure that we prevailed in that struggle. Not for centuries have we been entirely dependent for our defence on equipment produced exclusively on this island, and it would be naive to assume we ever could be.

Today, British defence manufacturers cannot produce equipment without international support. There are few systems anywhere—from mobile phones to jets to missiles—that can be built and manufactured without some sort of international trade. I would say that that is a good thing. International dependence and complex international supply chains are a good thing; apart from anything else, they help to keep the peace and to enhance international co-operation. However, many supposedly British procurement options, which are sold

13 Jan 2016 : Column 356WH

to politicians, civil servants and Ministers as the most British option, actually mean we end up being ever more dependent on other Governments.

Let us take the example of the RAF’s new transport plane—the Airbus A400M. It is partly manufactured in the UK, and a very good thing that is too—I do not denigrate that at all. But it has a shorter range, a lower top speed and a smaller payload than the comparable Boeing C-17 Globemaster, and it is considerably more expensive to boot. However, here is the really shocking thing: if we bought the C-17, we would need the support, compliance and good will of only one Government—the United States Government. But the A400M option requires the compliance and support of the Governments of France, Spain, Belgium, Germany and Turkey, as well as that of the United States. The supply chain is even more interdependent. Far from giving us so-called sovereignty of supply, the A400M is an example of procurement that is protectionist and, at the same time, makes us more dependent and less operationally sovereign.

Defence protectionism has also created a contractor cartel. In an attempt to prop up the defence industry, successive Governments have promoted the supply side and consolidated it. That has created what economists call—this is a rather clumsy term—a monsopoly, which is a monopoly of supply. That means that a limited number of suppliers, not the state, control the terms of trade. Britain is paying over the odds because a tiny group of producers sets the terms of trade.

Big business is not the only vested interest that distorts procurement, either. Perhaps inevitably there is inter-service rivalry, so that projects serve the interests of different sectors rather than the defence interest overall. We have unenforceable anti-lobbying rules, which mean that former defence personnel can pursue what I would regard as inappropriate contacts on behalf of clients, without censure. Protectionist policy and those various crony corporate vested interests are undermining our national security. They are preventing our nation state from being able to turn whatever fiscal power we have into military muscle. We are simply being less efficient than we ought to be. We need a procurement policy that puts the national interest first and allows us to convert the fiscal power that we have into the maximum possible military muscle.

A few weeks ago, the UK Independence party parliamentary resource unit published an excellent paper called “Rethinking Defence Procurement”,in which we set out some ideas and suggestions—I think they are rather sensible, soft suggestions—on what we can do to get things right. First we suggest that the default—though not the exclusive—approach should be to buy a weapons system off the shelf. I grant that there are some weapons systems that we need to make in-house; we need that capability. However, if we want the best value equipment possible we need to be prepared to buy off the shelf.

It would be perfectly possible for us as a nation state to build smartphones that would be manufactured exclusively in the United Kingdom. Probably, they would be the size of a brick, there would be a waiting list for them and they would run on clockwork. It makes much more sense for us to buy smartphones that are the result of international co-operation, with chips built in South Korea, design from California and software from India. International co-operation enables us to have smartphones with a higher level of technology for less cost every year.

13 Jan 2016 : Column 357WH

We should apply a similar principle to defence procurement. We might think of off-the-shelf procurement as being almost like urgent operational requirements—which I know the military rather like. In other words, the military can buy what it wants, from whom it wants. We can think of it as an urgent operational requirement, but without the guddle and the rush.

Secondly, we need to start consolidating not the supply side but the demand side. By working with our allies we could initiate joint procurement projects. That is not a case of our building and manufacturing things jointly; that would be a supply solution. Rather it would be a matter of putting in procurement bids collectively with our allies, ensuring that in many areas we would have a buyers’ market, where the buyers collectively could set the terms of trade. We could do that with a number of countries—not just European countries and NATO members but countries such as Australia and India. If they and we needed a weapons system, why not put in joint procurement bids with our Anglosphere allies? That would drive down prices and ensure both we and our allies got better value for money.

Thirdly, I would like Parliament to have real oversight of the procurement process. Instead of just reviewing the annual report from the Ministry of Defence, the Select Committee on Defence should be required to oversee and authorise major projects. We should take back as a Parliament the power to scrutinise what the Executive spend on our account. Specifically in relation to defence, the Defence Committee should be required to approve and sign off on particular large projects. That sort of oversight would ensure that there was genuine accountability on procurement.

Finally, anti-lobbying guidelines need to become law. I was delighted to hear my hon. Friend and neighbour the Member for Harwich and North Essex (Mr Jenkin), as Chair of the Public Administration Committee, making some suggestions about that the other day. I think that is exactly what we need to be prepared to introduce, to make sure that, yes, the expertise that exists in Government Departments can be shared with contractors, but that there are public records of those contacts and that where there is a revolving door there is some accountability to ensure that nothing untoward happens.

Britain needs a defence strategy that aims above all to keep our country safe. In an era of growing threats and constrained budgets, misspending is no longer a luxury that we can afford. We need real reform. I know that the Minister recognises the need to improve the way we spend our defence budget, and that he is a reformer. I also happen to know, too, that in his Department reformers do not always get an entirely easy ride. I look forward to hearing what changes he has in mind to improve things, and whether he will consider going further and recommending any of the measures I have outlined.

11.14 am

The Minister for Defence Procurement (Mr Philip Dunne): It is a pleasure to serve under your chairmanship, Mr Nuttall. It is all too infrequent that we have the opportunity to debate defence matters—and particularly defence procurement—in Westminster Hall, so I am especially grateful to the hon. Member for Clacton (Mr Carswell) for securing the debate, and I congratulate him on doing so. The subject is one of great interest to

13 Jan 2016 : Column 358WH

me, and to him, but of somewhat less obvious interest to other Members. It is a pleasure to see the hon. Member for Strangford (Jim Shannon) here; he takes a personal interest in the subject on behalf of his constituents and Northern Ireland.

It is a good time to have such a debate, not least because it comes two months after the Government published the gratifyingly well received strategic defence and security review in November. The review was comprehensive and ambitious, and when combined with the Chancellor’s summer Budget announcement it was good news for defence. Defence procurement is central to our plans to deliver our national security objectives, and that was precisely the point on which the hon. Member for Clacton opened his remarks—that the purpose of defence procurement must be to provide the capability for our armed forces to keep us safe. That is the primary duty of Government, as has been recognised in the priority that the Government have given defence and in the reform of defence procurement processes, in which the hon. Gentleman takes such a keen interest.

By giving us an increasing budget, the SDSR will help us to protect our people with more new planes, ships and armoured vehicles over the procurement cycle. It will help promote our prosperity. An additional task for defence—an additional strategic objective—of contributing to the economic prosperity of the country has been emphasised through the SDSR in a way that has not happened before. That has a number of implications for how we go about procurement.

Promoting prosperity provides a stimulus for innovation, which is essential for maintaining technological superiority over our adversaries. It provides the opportunity for the Department to become a champion of small business, which in many respects is where innovation originates. It also allows us to encourage defence exports, which means that we can allow our defence supply chain to be competitive internationally, from which we benefit through our own procurement. All in all that is a good thing, as I am sure the hon. Gentleman will agree as we explore the issue in this debate and on future occasions. We are on the right track. We may not have gone as far as he would like or necessarily as fast as we would like, but in my view we are making great strides.

Before I look to the future and address some of the hon. Gentleman’s comments, it is worth acknowledging the enormous achievements in the previous Parliament. I want to preface my comments on the document prepared by his party, which he referred to and which he has in front of him, by saying that many of the criticisms it makes—in many respects rightly—relate to a period that we are now some way beyond. They relate to the defence industrial strategy that was authored in 2005-06 under the previous Administration, which no longer prevails. Part of the disagreement that there may be between us will be about the extent to which today’s policy has moved on beyond the defence industrial strategy, rather than being grounded in it.

In 2010 we inherited a defence procurement position that was unquestionably unfit for purpose. It was not delivering to time, performance or, above all, cost. That is why, at a time of heightened pressure on the national finances, we had to make some tough decisions. We did not shrink from cancelling overrunning and massively expensive programmes such as the Nimrod MRA4 programme, to which the hon. Gentleman referred in

13 Jan 2016 : Column 359WH

his remarks. We embarked on the most radical series of defence reforms in decades, and I am pleased to say that those reforms meant that defence ended the last Parliament in a markedly better state than it began it in.

The National Audit Office’s major projects report for 2015, which was published before the end of last year and covered the most recently available material we had, recorded a fall of £247 million in the forecast cost of defence projects—the second successive year of reductions in the major projects it reviewed. That compares with a £1.2 billion in-year cost overrun reported for 2009 by the NAO in its major projects report.

The 2015 report builds on the success of the 2014 report, which reported the best cost performance since 2005 and the best time performance since 2001. That is powerful evidence of how far we were able to progress in improving performance during the previous Parliament. Indeed, Lord Levene of Portsoken said in his 2014 report on the Department as a whole that,

“a leopard really can change its spots”—

rare praise indeed from Lord Levene.

If I may reflect on the comments of the hon. Member for Clacton and the document to which he referred, we recognised the glaring inadequacies of the defence industrial strategy of 2005-06. That was why we determined to overturn it in a White Paper published in 2012, “National Security Through Technology”, which set out our thinking on industrial policy. It replaced outdated concepts of industrial sovereignty at any cost with a much more nuanced approach, saying that the sole aim of defence procurement was to equip our armed forces with the best capabilities we could afford at the best value for money. That meant putting an end to unaffordable gold-plated requirements and instead increasingly buying things off the shelf, from the global market where possible and appropriate.

“National Security Through Technology” highlighted the benefits of working with other countries, as the hon. Gentleman seeks to do, to open up each other’s defence markets and, where we share requirements, collaborate on international acquisition programmes. The best live example of that new way of collaborating on procurement is the F-35 programme—the largest defence procurement programme in the world ever. Eleven nations are pooling their demand signal to provide as large an order as possible to the contractor consortium—at the moment in annual buys, but in the future it will be multi-year buys. That order is for three different variants of the aircraft type, but it is essentially the same aircraft type for each customer, in order to avoid the bespoking that, as the hon. Gentleman said, becomes so expensive in defence procurement. We are already doing that, and we are doing it in a big way.

The White Paper also recognised that defence procurement is different from other procurement, so for some aspects of capability, we still need to take special measures to maintain our operational advantage and freedom of action, but we stated that those would become the exception rather than the rule.

Having pointed out some of the areas where we agree with the hon. Gentleman’s critique, I will have to disappoint him by saying that I do not see the document prepared by his party as a valid critique of today’s policy and the

13 Jan 2016 : Column 360WH

important work that has been done over the past five years. The White Paper that we published heralded a series of sweeping reforms to defence procurement, which went hand in hand with the much-needed reforms we made to the wider Ministry of Defence. We adopted the proposals outlined by Lord Levene to overhaul the structure and management of the Ministry of Defence. We have thereby created a much leaner, more strategic head office, devolved responsibility and accountability to the single services and, crucially, stood up a Joint Forces Command to look after cross-cutting areas such as helicopters and ISTAR—intelligence, surveillance, target acquisition and reconnaissance. Far from being dominated by single service rivalry, the Department is now more joined up than at any time in its history. That was amply demonstrated by how we handled defence’s contribution to the SDSR, with virtually no trace of the behaviours that had so coloured the exercise five years before.

Nowhere has the extent of our transformation been more ambitious than in our procurement entity, Defence Equipment and Support. DE&S provides vital support to the armed forces, without which they simply could not operate, and I pay tribute to the civilian and military staff employed in that endeavour for their dedication. Re-formed as a bespoke trading entity in April 2014, DE&S now has the freedom to make the changes needed to transform it into a world-class acquisition organisation. DE&S staff numbers have already reduced by around 18,000 since 2007 and, through transformation, we will continue to professionalise it and focus on the people and skills we need.

Mr Carswell: Of those 18,000 people, how many have been re-hired in a contractor or arm’s length capacity?

Mr Dunne: I cannot give the hon. Gentleman an exact number, but some of the activities previously held within DE&S have been outsourced. One example is the operation of the Royal Navy operating bases, which had, for some historical reason, been managed within DE&S. That has now gone back to the Navy, so those jobs by and large remain, but a large number of the 18,000 are a reduction in individual roles, to become more efficient.

Turning to how we obtain equipment, it is not as simple as making direct comparisons with other nations’ defence procurement models. Structures, roles, operational commitments and, consequently, equipment needs vary. For the past three years we have published a comprehensive and fully costed 10-year forward-looking equipment plan that takes account of our defence priorities and the capabilities needed to support them.

Our £178 billion investment in equipment over the next decade will support all three services, including committing to the F-35 joint strike fighter, which I have mentioned, and to new maritime patrol aircraft. Incidentally, we have decided that those aircraft should be procured off the shelf, to take advantage of the existing production line in the United States, to maximise interoperability with the United States and the other allies that will be procuring that capability, and to minimise bespoking, so that the cost is as plain vanilla as it can be. Through the equipment programme, we will also invest heavily in the Navy through the Type 26 frigates and in the Army through forming the new strike brigades with its equipment, which will be state-of-the-art.

13 Jan 2016 : Column 361WH

Mr Carswell: Excellent.

Mr Dunne: That will allow us to acquire the capability we need, with minimal costly bespoking, in the timescale required. The hon. Gentleman has just indicated from a sedentary position that he supports those initiatives.

We share the hon. Gentleman’s view that protectionism is not good for defence or for the UK in the long term, not because we do not want to support British industry—we do—but because we recognise that protectionism provides no lasting solution. It does not give us the capabilities we need when we need them, at a price we can afford. Above all, it does not help industry. It stifles innovation, saps productivity and suppresses competitiveness.

That is why we focus on competitive procurement, with one of the most open defence markets in the world. It is why, for example, we decided to procure the new fleet of Royal Fleet Auxiliary tankers from South Korea, which the hon. Gentleman touched on in his remarks. The fleet will come into operation later this year and draws on key British technology, with some 25% of the supply chain for the vessels coming from the UK. There is still a strong UK component to an international procurement, demonstrating that having an open defence market helps to sustain a competitive defence industry in this country.

We recognised that we needed to reset the relationship with industry, particularly on the large single-source projects of which the hon. Gentleman is so critical. For that reason, we used the Defence Reform Act 2014 to reform single-source procurement. It established a statutory governance framework to ensure that costs are fair to us and to our suppliers. We have also set up the Single Source Regulations Office as an independent review body, and it has now been operational for 12 months. No longer will suppliers have carte blanche to set the terms of the trade. We believe that that will help to address the hon. Gentleman’s concern about defence inflation by imposing a much greater spotlight of transparency on individual single-source contractors and the bill invoices they submit, which we think will put downward pressure on inflationary pressures.

I point out gently to the hon. Gentleman that some of the cost comparisons in his party’s document confuse different things, often comparing apples with pears by not taking into account some of the additional costs that appear when we procure in the UK, other than on an off-the-shelf basis. We tend to include the cost of support, training and simulators alongside the cost of the capital equipment itself, which can often distort a like-for-like comparison with an off-the-shelf purchase.

Question put and agreed to.

11.29 am

Sitting suspended.

13 Jan 2016 : Column 362WH

Care Homes: England

[Mrs Anne Main in the Chair]

2.30 pm

Peter Kyle (Hove) (Lab): I beg to move,

That this House has considered care homes in England.

It is an honour to serve under your chairmanship, Mrs Main. It is the second time I have done so; the first was on my first Bill Committee, and this is now my first Westminster Hall debate, so I seem to be following you around the corridors of the House of Commons.

I take pride in the fact that my first Westminster Hall debate is on the care that we as a society provide for older generations. Care homes are an essential part of our social care network, providing support and residential care for more than 400,000 older people. We must reassure older people, families, carers and society at large that we are a country that will continue to offer sustainable, quality, statutorily supported care in what is about to become an extremely difficult funding climate for them.

This is not the first time that I have raised this topic; the Minister will be familiar with the many parliamentary questions I have tabled on the subject. As he is personally dedicated to quality care for older people, I know that he will welcome the opportunity to discuss this matter in more detail than would often be the case for a humble Back Bencher such as me going through the normal channels of parliamentary protocol.

In many ways, it is strange that we need to have this debate at all. With an ageing population and estimates that the number of people aged 85 and over is set to double over the next 30 years, people would think that having a well-funded and secure network of homes to provide care for later in life would be a given. This is the 21st century after all, and we meet in a Parliament of one of the world’s largest economies—an economy that was built through the graft and ingenuity of the wartime generation, our security delivered through their sacrifice.

However, evidence and testimony from care providers points to a sector in a perilous state, primarily for two reasons. First, a significant amount of the funding for older people in residential care who lack independent means comes from local authorities, so the significant cuts in local council funding have led to a 17% reduction in real terms in local authority spending on adult social care for older people since 2009-10.

Paula Sherriff (Dewsbury) (Lab): I recently took part in a conference organised by the GMB trade union along with carers and people who run care homes. Those who run care homes expressed specific concerns about the fact that they were aware of people—and particularly older people—sometimes being kept in hospital when there was no real medical need for them to be. If we compare the costs, it costs a couple of hundred pounds a day for them to be staying in hospital—

Mrs Anne Main (in the Chair): Order. The hon. Lady’s intervention is becoming a speech.

Paula Sherriff: Okay. Does my hon. Friend agree that we should speed up the transitional process and put pathways in place, so that the move between hospital and care homes can happen much more efficiently?

13 Jan 2016 : Column 363WH

Peter Kyle: I am extremely grateful to my hon. Friend for raising an incredibly important point, and I know well from conversations that we have had both in the Chamber and outside it how much she advocates for her constituents who are in care homes. The fact is that the so-called bed-blocking problem is often caused not by a lack of beds, but by a lack of capacity out in communities, for various reasons. One of those involves communities and the care home sector itself. The fact that people are ending up in hospitals is indicative of the much broader problem of caring for people where they need to be cared for most, which is in their homes and communities. My hon. Friend makes that point very well.

The significant cuts to local council funding have led to a 17% reduction in real terms for local authority spending. Industry research cited by ResPublica points to a shortfall between the cost and provision of the average weekly fee paid by local authorities, which worked out as £42 per resident per week in the period between October 2014 to September 2015.

Anne Marie Morris (Newton Abbot) (Con): As the hon. Gentleman may know, I have been a great champion of care homes and the need to meet the challenges over many years. Does he at least, despite being absolutely right to raise these problems, feel some comfort from the 2% precept? I understand that many of the county councils are going to take up that precept, which has been introduced to alleviate some of the challenges that he alludes to.

Peter Kyle: I am very grateful for that intervention. I will come to the precept in a moment, when I would welcome further interventions as we talk about the detail of the precept and how it actually, while being welcome on a surface level, will be rolled out in different ways and impact on communities differently. I will keep my eyes open, as the hon. Lady might well want to come back to this when we tackle those issues.

The pressures on care providers will only be exacerbated by the increases in the minimum wage that will come in from this April. However, let me restate my position on the rising minimum wage for the avoidance of any doubt: I believe that those working in the caring professions deserve a pay rise for the fantastic jobs that they do, especially considering that it has sadly become a low-pay sector. I am glad that there is now cross-party consensus on the ambitious rise that is deserved by all those on low pay. However, we must make this work, and it will only work if we are aware of and prepare for what will happen in the areas that this will impact on hardest.

The National Care Association, for example, has estimated that the rise will add at least 5% to payrolls this year and a further 7% year on year by 2020. Without extra resources, local authorities will end up pushing independent, statutorily funded care homes closer to the brink. The excellent ResPublica report from November laid bare the startling and shocking fact that an unfunded living wage could end up with the loss of 37,000 care home places. I know that the Minister and his colleagues will point to two actions that they think will mitigate that, so let me address both of those in turn.

First, there is the social care precept. Introduced in the autumn statement, it gives local authorities the power to raise council tax by an additional 2%, the proceeds of which are ring-fenced for social care. Although all additional funds are welcome, that is a drop in the

13 Jan 2016 : Column 364WH

ocean compared with the additional resources needed. Following the autumn statement, the King’s Fund estimated that the funding gap for social care could be as high as £3.5 billion by the end of this Parliament.

What is more, the precept may well end up generating extra revenue where it is least needed. At present, residential care home funding is split between people who pay for their care themselves and those who have it paid for by their local authority. Self-funders pay 50% more than those funded by councils so, in effect, they subsidise those paid for by the public purse. It is not hard to work out that the homes with a smaller number of self-funders are the ones who are most at risk financially from the cut in funding rates from local authorities. The split varies across the country, but on the estimated figures put together by LaingBuisson in its “Care of Older People UK Market Report”, the number of self-funders in 2014 was only 18% in the north-east, with the majority of other regions hovering around the 40% mark. It is pretty obvious that the power to raise council tax will generate the most revenue in the areas with a higher council tax base, namely the southern regions of England, which—you guessed it—have a higher number of self-funders.

Anna Turley (Redcar) (Lab/Co-op): Does my hon. Friend share my opinion that council tax can be a regressive tax, and that for areas such as mine, which have levels of deprivation and are already hit by a tax that is not particularly fair, this precept is not a progressive tax? Those areas that have already been hit hardest by cuts in local government funding will be hit yet again by this tax.

Peter Kyle: I am very grateful to my hon. Friend for making that point. In representing Redcar, she knows better than anyone that people in residential care homes that are heavily reliant on statutory funding will be hit the most because of the cuts that are going into local authorities, and they will be hit again by the precept, which, because of the process that I have just outlined, will be front-loading resources into the areas that need it least. Her area of the country will have people who are more dependent on statutory funding for care home places. The 2% is based on a lower percentage of people paying council tax in the first place and will have to cover more people. That is why the precept is not fair and will not get to the people who need it most.

Anne Marie Morris: The hon. Gentleman is being incredibly generous with his time. He raised a point about inequality. Does he agree that we should be asking the Care Quality Commission to look at how much funding is being supplied in each county to each home? At the moment, it seems that it is a bit of a lottery, for all sorts of reasons, which may or may not be part of his argument. At the very least, we should agree the standard of care and it should be equal across the country.

Peter Kyle: I will always be generous with my time for the hon. Lady because, early in this debate, we have found common ground. Later in my speech, I will call for assessment of exactly those areas. We need to understand how the funding changes and the new mechanisms are impacting on the ground and geographically across the country. We must make sure that any revenue generated, particularly in these times of restraint, are going to the

13 Jan 2016 : Column 365WH

parts of the country that need it most. My hon. Friend the Member for Redcar (Anna Turley) made the point well from the Opposition Benches. In this case, the support promised by the Government will simply not end up where it is needed most.

Secondly, on the better care fund, Ministers have belatedly recognised some of the flaws in simply relying on a precept to generate the extra funds needed for social care. There is simply not enough revenue being generated in poorer areas. The Government have said they will take that into account and use a formula for allocating extra funds for these areas taken from the better care fund. That was announced less than a month ago and we wait to see exactly how the details will operate in practice. There are murky areas and a lot of detail is coming. We must make sure we know exactly how this will impact providers in the front line.

Care England, a leading representative body for the independent care services, has already voiced its concern. It doubts whether the funding will get to the care homes that need it most. It is more likely that it will be used on other unfunded projects across the social care budget. It is worth remembering that the initial funding for the better care fund was not new money; it was funding to assist health services which was re-allocated to local authorities. I want to give the Minister the opportunity today to confirm whether the £1.5 billion is new money, or is again taken from existing health service budgets.

Local authorities will not see any of this money, whether new or recycled, until 2017-18 and even then it will be only £105 million. It could be too little, too late to prevent parts of our care home sector catering for the most vulnerable people in our society collapsing or withdrawing from the market and focusing on self-funding residents. Initial better care fund plans have been signed off by local authorities and NHS England. It would be great if an evaluation was conducted into how the funding to date has helped to support residential care homes, if at all.

I think the Minister can now see that there is cross-party support for this kind of independent evaluation into how funding mechanisms are impacting on front-line care provision. It could act as a best practice guide for authorities going forward, even when the extra resources the Government referred to become available. Will the Minister commit to this evaluation covering the impact of funding on the sector? Both Government and Opposition Members would find that helpful.

The majority of media coverage of the sector has been about the state of big providers, such as Four Seasons Health Care and HC-One, and speculation about their future viability. It is important to realise that the 10 largest providers account for about only 25% of the market, the rest being much smaller, independent providers. In my constituency there is a small family home, Wilbury rest home. Last year I sat down with the owner, Graham Dean, shortly after the Chancellor’s announcement on the living wage. Graham is the second generation of his family to run the home and, remarkably, he was born in it. Listening to him and other local independent care home managers talking with kindness, compassion and outright professionalism about the people they care for day in and day out has left a deep impression on me. They provide the kind of loving, caring environment that every human being deserves into their old age.

13 Jan 2016 : Column 366WH

There are countless homes like that dotted around the country, but they are being pushed to the limit. Indeed, a survey from the National Care Association shows that almost a quarter of providers could exit the market altogether. That would be a tragedy for residents and society, and a crisis for the Government.

Another issue that is putting pressure on the sector is the national shortage of nurses, which has resulted in the increased use of agency nurses. In some cases that costs double the amount for permanent staff. To the Government’s credit, they have recognised that there is an issue and have been working with the care sector and with the Government’s skills body to develop a new training scheme to create a career ladder into caring professions. Sadly, that project was axed last December, just weeks before it was due to be launched. I understand from written answers that I have received that that was not a decision taken by the Department of Health. As a member of the Select Committee on Business, Innovation and Skills, I am happy to take up this cause with the relevant Ministers in that Department if the Minister feels that would be helpful. I would like to aid his work and I hope that his officials have already been doing much work behind the scenes to fight for its reinstatement.

As I move to my closing remarks, I would appreciate some reassurance from the Minister that the Government have a plan—dare I say it, a plan B—that is ready to be implemented should the worst-case scenario predicted by ResPublica and other respected think-tanks in the health sector come to pass. Do the Government have in place a robust contingency plan should the statutorily funded care home sector collapse, resulting in the nightmare scenario of 37,000 older people becoming homeless?

When Southern Cross Healthcare went bust in 2011, there were just enough resources from other providers in the sector to take over. Due to the current state of the industry, no private provider has the capacity to respond to a shortfall of 37,000 beds.

Mr Gregory Campbell (East Londonderry) (DUP): I congratulate the hon. Gentleman on securing this debate. He is outlining the scenario that might lie ahead if the Government do not increase their intervention. Does he agree that, for the first time in history, the UK is reaching a stage where, in addition to senior citizens being dependent on care they receive in care homes, some of their sons and daughters are of such an age that they, too, are senior citizens, so the level of dependence is even greater?

Peter Kyle: I am extremely grateful for that intervention. I had not considered that and I will take it on board. I am grateful to the hon. Gentleman for pointing it out and putting it on the record.

It may not be a Southern Cross that fails first. In fact, it is most likely to be the smaller, independent providers in areas that are most dependent on local authority placements. Can the Minister reassure us that his Department and local government have the capacity to respond to any piecemeal closures that are likely to occur?

The Minister for Community and Social Care (Alistair Burt) indicated assent.

Peter Kyle: The Minister is nodding and I look forward to testing the argument in his statement.

13 Jan 2016 : Column 367WH

Everyone here wants to ensure dignity for all later in life. That can be assured only if there is a properly resourced residential care sector with stability and financial security. I look forward to hearing the Minister’s response and receiving reassurances that all Members, of whatever party, want to hear, and I look forward to being able to work with him and care home providers in the months and years ahead to ensure that that type of residential care sector becomes a reality.

Mrs Anne Main (in the Chair):I shall call the Scottish National party’s Front-Bench spokesman at 3.30 and then the Opposition Front-Bench spokesman and the Minister. Quite a few hon. Members want to catch my eye and if they divvy up the time between them that will be helpful.

2.49 pm

Huw Merriman (Bexhill and Battle) (Con): It is a pleasure to serve under your chairmanship, Mrs Main. I thank the hon. Member for Hove (Peter Kyle), one of my constituency neighbours, for securing the debate and permitting me to consider the role that care homes play in my constituency.

Some 27,000 of my constituents are aged over 65 years. The hon. Gentleman mentioned the ResPublica article, which states that by 2050 the proportion of people in the UK aged 65-plus will have risen to 25%. In my constituency it is already at 28%, against a national and regional average of 17%. Indeed, Bexhill and Battle has the fifth highest proportion of people over 65 years old in the UK.

As a result, many of my constituents live or work in care homes. Before and since my election, I have visited many of those care homes and been hugely impressed by the levels of care and devotion afforded to that most special group of constituents. It is therefore right today to celebrate the role that care homes play in our country and to say thank you.

There is an unfortunate perception of care homes, which regular visitors such as myself try hard to dispel. Although many people feel negatively towards hospitals, they are considered to be places where improvements in outcomes are possible. The same is not often said of care homes. The perception is of a place that people move to when their lives have deteriorated and will continue to deteriorate. That perception means that the public rarely hear about the improvements in outcomes that care homes deliver, the innovative treatment that residents are afforded and the compassionate care that owners and their staff deliver to residents. I hope that we can use this debate to celebrate what care homes do for our constituents.

However, it is right to highlight some key challenges for care home providers, and I shall list two that require the support of the House and the Government. The first, which the hon. Gentleman mentioned, is local authority funding. The gap between local authority care home fees and the cost of care home places in real terms continues to grow. That has represented a drop of almost 5% for council-funded residents over the past five years. That situation could be exacerbated by the welcome announcement of the Government’s new living wage, which will give care home staff a wage of £9 an hour by 2020. I was glad to hear the hon. Gentleman

13 Jan 2016 : Column 368WH

celebrate that pay rise for hard-working care home staff, who, as he mentioned, have been underpaid for many years.

Many of my local care home providers have approached me with concerns that they may have to cease operating if margins continue to be squeezed. On their behalf I have lobbied Ministers to highlight the funding gap, and I am pleased that the Government have now given local authorities the right to add a 2% council tax surcharge for adult social care. In East Sussex, local authorities and the NHS are delivering our “Better Together” integrated healthcare programme. Although I continue to lobby for lower taxes for my constituents, I hope that they will embrace that new tax levy as a means to support the funding of care for our elderly community. I therefore hope that the gap will be plugged, at least in part. It will be interesting to hear the responses of my right hon. Friend the Minister to the other questions that the hon. Gentleman asked.

I would like to touch on staff recruitment. In the care home sector, the staff turnover rate is 32%, which is incredibly high. It is clear that the sector has issues in recruiting and retaining staff. Reliance on staff recruitment from abroad is very strong. I am delighted that the Government have added care home nurses to the shortage occupation list, albeit temporarily. Those who criticise net increases in immigration to the UK need to understand that our population is getting older and needs more care, which means more carers. I welcome the desire of the care home industry to win more contracts from our clinical commissioning funders, because I hope that that will make jobs in care homes more fulfilling, skilled and desirable. I also hope that it will allow us to rely less on staff coming from abroad—from countries that are underdeveloped and whose own residents may need care and assistance even more than people in this country do.

I will conclude, to allow other hon. Members to speak. I welcome the debate, and I celebrate the role that care homes play in this country. I have visited care homes where dementia sufferers are taken on incredible journeys back to their childhoods, where schoolchildren are invited in to go through their exercise books with residents, where residents play games and sing and where there is a great celebration of the rich lives that they have experienced and will continue to experience. I look forward to visiting more care homes and championing their owners, staff and residents in the years to come.

2.54 pm

Joan Ryan (Enfield North) (Lab): It is a pleasure to follow the hon. Member for Bexhill and Battle (Huw Merriman). I echo what he said about some of the excellent care that we see in care homes.

I congratulate my hon. Friend the Member for Hove (Peter Kyle)on securing an important and timely debate. He highlighted many of the key concerns of care providers in the UK. One is the current funding crisis in social care. Over the past five years we have seen social care budgets across the country cut by almost 11%. In Enfield, the local authority has had to deliver net savings in its adult social care budget of 16% over the past four years, and by 2019, the savings requirement that the council will need to initiate will further reduce the budget by £19.8 million, from £80.8 million this year to £61 million. That is equivalent to another 25% reduction

13 Jan 2016 : Column 369WH

in the net budget. How do the Government seriously expect local authorities such as Enfield to cope with a cut of that level?

Andrea Jenkyns (Morley and Outwood) (Con): I have been a councillor, so I know that budgets have been quite tight in local authorities over the years. A care home in my constituency, Siegen Manor, is possibly due to close. Does the right hon. Lady agree that we need to look at the way councils spend money? In my new city council, there is a lot of wastage. We need to look at how councils spend their money, because I could give a lot of examples of how they could—

Mrs Anne Main (in the Chair): Order. I call Joan Ryan.

Joan Ryan: It is always important that we have a weather eye on how any public authority is spending its money and that we get the best value for money; that goes without saying. However, I think— I do not believe the hon. Member for Morley and Outwood (Andrea Jenkyns) was disagreeing with me on this—that we need to hear from the Government how local authorities can be expected to cope with the size of cut that has been happening and is continuing to come their way. I thank the hon. Lady for her intervention.

Spending reductions of the size that my local authority is facing will almost inevitably result in cuts to the services that Enfield delivers to some of the most vulnerable people in the borough. Given the huge pressures on shrinking resources, I commend Enfield Council for its nationally recognised standards of best practice and the gold accreditation that it has received for its safeguarding work. Enfield has a wide range of care homes, which provide support to older and disabled people not only from the local area but from other areas. However, the deep cuts from central Government have already seen care homes close, and a significant increase in the number of people placed in the borough by other councils has meant that nursing home provision, particularly for people with dementia, is under severe strain. As a result, an ever increasing burden has been placed on our local NHS services and family carers. In those circumstances, it can be no great surprise that there is difficulty in recruiting and retaining staff to work as care providers.

Front-line care workers are all too often grossly undervalued. They offer vital support to people with ever more complex conditions, yet in return they often receive very poor wages. So although I welcome the introduction of the national living wage of £7.20 from April 2016, that figure is nowhere near the current London living wage of £9.40. Many care workers working in Enfield and elsewhere in London need that hourly rate just to get by. However, the Government have yet to explain how the care sector will be able to cope with the increased pressures on payrolls when funding has been so drastically cut. It is estimated that the introduction of the national living wage will add at least 5% to payrolls from 2016-17 and a further 7% every year until 2020. That will drive even more front-line care providers out of business and make a bad situation even worse.

I would like to draw to the Minister’s attention a letter I received from the Enfield Carers Centre in August last year. It read: