On 23rd March 2022, the House of Lords Grand Committee debated the Economic Affairs Committee Report on Universal Credit. The Bishop of St Albans made the following speech:
The Lord Bishop of St Albans: My Lords, I first add my thanks to the Economics Affairs Committee for producing this excellent report. As is often the case with a Select Committee report, reading it is not only enlightening but deeply informative. I have learned a great deal from it, for which I am grateful.
I too pay tribute to the noble Lord, Lord Forsyth, for his tenacity, such as when securing the intervention in the Chamber earlier. It was so interesting that the concerns were being raised from every Bench. I hope the Government Whips and others are listening to the profound unease coming from every quarter of the House; it is not going to go away. I have experience of working across two relatively well-off counties. I used to work in the Black Country, but nowadays I have responsibility for Hertfordshire and Bedfordshire, which are fairly wealthy, by and large. The concerns coming out of parts of Watford, Stevenage and Bedford are uniform: we are facing a serious challenge.
I have to confess to noble Lords that some of the material in this report was new to me. I am ashamed to say that I had not realised, until reading it, that universal credit is being used by the Government as a vehicle to recover debt. I was glad to be able to raise that earlier although I do not think the Minister understood the point I was making, because we received no answer. This is deeply disconcerting, not only because it will not deliver what the Government want. Simply taking pennies off the poor at a time when Her Majesty’s Government have written off £16 billion in Covid business loans due to errors and fraud—which led to resignations from the Front Bench in our own House—is quite extraordinary and unrealistic.
As a general principle, I am absolutely committed to recovering debts. If the Government deem it necessary to pursue these historic tax credit debts from UC claimants, I hope they will broach other debts with the same level of vigour. I think we have no choice but to support the recommendation that we look for a Jubilee-style “Reset the Debt” policy, which would be just a small first step to addressing the serious and growing problem that we face.
What is true of the notion of pursuing claimants is equally true of the sanctions regime, which, as the report mentions, is one of the most punitive in the world. The findings of the report in this regard largely mirror those of the 2015 study by Christians Against Poverty, which stated that there was little evidence to suggest that the UK benefits sanctions regime made a positive contribution to helping people find work but that it did help in discouraging those who were unemployed from applying to the benefits system. I fear that the new shortened sanctions regime introduced earlier this year is merely an extension of this logic: an aid to get people off, and further discourage them from accessing, UC. However, the whole point about UC is that it is for people who have no other place to turn to. That is why it is vital that Her Majesty’s Government can categorically prove that sanctions help facilitate claimants in finding work and that the Government are open and honest about their purpose and effects.
I move now to some general points. The most fundamental question is whether universal credit is enough to live on. Leave alone the details of the system; there is simply a fundamental, pressing question when we face the levels of inflation that the noble Lord, Lord Shipley, has just mentioned about whether it will enable people to weather the current economic storm. Can the Minister assure us that Her Majesty’s Government are looking at what would be appropriate increases in universal credit, as this huge storm comes together? It is simply hitting people now. I had a meeting this morning with someone from my diocese who yesterday visited the food bank in Broxbourne. Parts of Broxbourne are fairly well heeled, but they had seen a doubling in the number of clients in the past year; it has really hit them badly.
This report goes beyond a simple discussion of the amounts of universal credit that individuals receive and details the design flaws and tensions within the scheme. We all know that it is hoped that UC should be a transitional pathway to lead people into stable, long-term employment and financial independence. We all think that is the best way forward. The problem is that we are trying to do it at a time when much of this poverty is to do with in-work poverty, as repeatedly and consistently raised by different people.
Regardless of the lived circumstances, I echo the report’s concerns on the substantial fluctuations in month-to-month income due to the monthly assessment period and the huge difficulties that that is causing people. When visiting and meeting people in different parts of my diocese, I have been struck by how much this has been raised, as if it is almost impossible to make any plans. That then rolls out in all sorts of areas of public policy. For example, not being able to plan means that we cannot do the detailed work needed to ensure that people can live on a balanced diet, so that we can address the huge problems caused by eating inappropriate foods and obesity, which have knock-on effects such as diabetes and other problems.
I totally support the report’s recommendation to fix the level of awards for three months, to provide longer-term budgetary stability and encourage people to work without any pecuniary downside. Extending the assessment period might allow individuals to experience what one hopes is the dignity of labour as a platform on which to build their employment prospects. I hope that the Government will take on board some of the report’s recommendations so that we can attend to the disparities and produce a fairer and more just benefits system, which accords with Her Majesty’s Government’s own vision of a system that will help people to move into work in the long term and find themselves in a position where they can be full and contributing members of society.
Extracts from the speeches that followed:
Lord Bridges of Headley (Con): Something more fundamental than this strikes me. As we just saw in the Chamber, this entire area of policy, especially the issue of the £20, is uniting Members on all sides of the House. This area of policy needs a fundamental reassessment, for reasons that I will come on to, but especially for the reasons the report sets out: the five-week wait for the first payment; fixing the level of awards for three months; rebalancing the sanctions regime; the abuse of universal credit to recover debt, as the right reverend Prelate mentioned; and, perhaps most important of all, making the £20 a week uplift permanent. All these recommendations seem to make perfectly eminent sense—and that was the case when the report was published.
Baroness Stedman-Scott (Con, Parliamentary Undersecretary of State, Foreign, Commonwealth and Development Office and Department for Work and Pensions): The right reverend Prelate the Bishop of St Albans referred to the monthly assessment periods. Entitlement to UC is calculated in monthly assessment periods and the amount paid reflects as closely as possible the actual circumstances of a household in each assessment period, including any earnings reported by the employer in that period. Monthly reporting allows UC to be adjusted monthly, which I can only say is better than the tax credit yearly reconciliation. It ensures that, if a claimant’s income falls, resulting in a rise in their universal credit, they will not have to wait several months to receive it.
Many noble Lords, including my noble friend Lord Forsyth, the right reverend Prelate the Bishop of St Albans, the noble Lord, Lord Shipley, and the noble Baroness, Lady Wilcox, talked about advances. For UC, new claims advances are available urgently if a claimant needs support during their first assessment period and budgeting support is available for anybody who needs extra help. Advances of 100% of potential UC entitlement are available urgently. With an advance, claimants receive an additional UC payment, resulting in 25 payments over a 24-month period. We have reduced the normal maximum rate of deductions from 30% to 25% and have made numerous improvements to UC, including ensuring that people get the money they need as soon as possible through advances.