Alok Sharma, Conservative MP for Reading West and the minister of the Department for Work and Pensions (DWP), took part in a debate on Universal Credit and Debt on Wednesday 5 June. The debate had been requested by Ruth George, Labour MP for High Peak and took place in Westminster Hall.
Westminster Hall debates
Westminster Hall debates can take place on Mondays, Tuesdays, Wednesdays and Thursdays. MPs apply for Wednesday debates and the subjects are selected by ballot organised by the speaker’s office.
Alok Sharma MP responds regularly to oral and written questions from MPs about Universal Credit which can be seen on his Parliament web page.
Edited highlights from Alok Sharma’s speech in the Universal Credit and Debt debate
Alok Sharma spoke at 4pm after other MPs had had their say on the topic.
It is a pleasure to serve under your chairmanship, Mr Gray, in this very important debate secured by the honourable member for High Peak (Ruth George). Whatever our political differences, I am happy to acknowledge that she and indeed all the honourable members who have spoken care very deeply about their constituents. I want to be clear that I want to ensure that every single person who is claiming universal credit gets the support that they absolutely deserve.
Summary of the current situation
Let me start by setting out where we are with universal credit. Last year, universal credit completed its roll-out to all jobcentres across the country. We now have just under two million people claiming this benefit, and all new entrants to the benefits system now claim universal credit.
I entirely agree that we must ensure that we provide support through the welfare system to the most vulnerable. I am pleased that colleagues from all parties, including the honourable member for High Peak, have acknowledged that changes have been made. My honourable friends the members for Waveney (Peter Aldous), and for Gloucester (Richard Graham), talked about the fabulous work being done by work coaches in our jobcentres.
As colleagues will know, in the last two budgets, we announced changes to universal credit worth an additional £6 billion. I do not like to introduce rancour into this type of debate, and I am always open to discussion, but I gently point out that on those occasions, opposition members did not vote to support that extra money going into the system.
From this October, the government will reduce the maximum rate at which deductions can be made from a universal credit award from 40% to 30% of the standard allowance. By the end of 2019-20, it is forecast that around 290,000 universal credit households will have had deductions reduced, by an average of £295 over the year. It is already possible to extend the period over which advances are repaid to 15 months in certain circumstances, and of course, as members have acknowledged, from October 2021, the maximum period will be extended to 16 months for all claimants.
One issue not touched on in the debate was payment timeliness, but it is worth pointing out that it has been raised in previous debates, certainly during my time as a minister. Payment timeliness has improved significantly. We now pay around 85% of new claimants of universal credit in full on time. In addition, 95% of claimants are paid in full within five weeks of their payment due date. If there are delays in making the first payment, that can be due to outstanding verification issues, such as the need to provide bank statements or proof of rent. It can also be due to a claimant not signing their claimant commitment. For ongoing claims, payment timeliness is around 98%.
The shadow minister [for Work and Pensions], the honourable member for Weaver Vale (Mike Amesbury), raised the issue of employment. The whole point of simplifying the welfare system is to remove the cliff edges and the disincentives to take on work and extra hours that existed under the legacy benefit system. We now offer claimants one-to-one support to help them to move into work.
I hope that colleagues will acknowledge that we are seeing record rates of employment, month after month. The shadow minister talked about zero-hours contracts, but he will know that less than 3% of people in employment in the UK are on zero-hours contracts. That figure has fallen this year. Indeed, those on zero-hours contracts are doing about 24 hours of work a week on average.
Help to claim and debt advice
We have recognised that we need to provide a consistently high level of support to those who may have difficulties in making a universal credit claim. That is why we announced our partnership with Citizens Advice and Citizens Advice Scotland, which are now funded to provide the ‘help to claim‘ service for claimants.
In the past, a number of colleagues have spoken about debt advice. They will know that debt advice is now fully funded by the financial services levy, and that service delivery is commissioned by the Money and Pensions Service [MaPS], which was launched in January this year. In 2019-20, MaPS will provide around 560,000 sessions of debt advice in England.
A number of colleagues raised the issue of rent arrears. I point out that a report published in July 2018 by the National Federation of ALMOs, or arms-length management organisations, showed that over three quarters of their tenants who had started claiming universal credit were already behind with their rent prior to commencing their claim. Also, research that we have carried out shows that the proportion of universal credit claimants who were in arrears at the start of their claim fell by a third after four months. In the universal credit full service claimant survey, which was published by the DWP in June 2018, 84% of claimants said that they felt confident about managing and paying their housing costs.
My honourable friend the member for Gloucester raised the issue of rent arrears and asked what further work were doing on it. I can confirm that we are carrying out further analysis with a number of housing providers to investigate and understand the true level of rent arrears among their tenants, and what is causing those arrears. Of course, when we have that information, we will publish it.
Tax credit debt when transferring to Universal Credit
A number of colleagues raised the issue of tax credit debt. Her Majesty’s Revenue and Customs [HMRC] already seeks to recover overpayments of tax credit debts. When a claimant moves on to universal credit, any outstanding debt is transferred to the DWP for recovery. This does not include debt that is subject to ongoing disputes or appeals, and HMRC tells the claimant the amount of debt that is being transferred to the DWP for recovery. HMRC and the DWP continue to work closely to improve the claimant journey. This includes having a joint inquiry team to handle any issues that tax credit customers might experience during their move to universal credit. Of course, if claimants are struggling with the rate of repayment applied, they can ask the Department to review that rate.
And finally, from Alok Sharma
In conclusion, we are making changes that are benefiting claimants, but I am always happy to talk to colleagues about how we can do better.
And finally from Ruth George
I thank everyone who has contributed, and the organisations for all their research and briefing. To anyone who is watching who is suffering under universal credit and the deductions that are being made, I say this: get advice, challenge those deductions, and come and see your MP about them. Let us get them sorted.
- Hansard Online
- Parliament Online
- Register of members interests
- Universal credit and debt debate – Parliament TV
- Universal Credit and Debt
- Citizens Advice England: getting help to apply for Universal Credit
- Alok Sharma home page, Twitter page, at Hansard and They Work For You
- MP expenses at the Independent Parliamentary Standards Authority