Universal Credit: Financial Resilience

4. What assessment she has made of the effect of transferring to universal credit on households’ levels of financial resilience.

14. What assessment she has made of the effect of transferring to universal credit on households’ levels of financial resilience.

Universal credit ensures that support goes to those who need it, allowing 700,000 more people to receive benefits than did previously—this is worth approximately an extra £2.4 billion. Those who move to UC from legacy benefits and whose circumstances remain the same will be eligible for protection of their entitlement at the point of transition.

This is Challenge Poverty Week, and plenty of people are challenged by UC. They face what Citizens Advice Scotland describes as an “acute dilemma” between enforced hardship for five weeks, while there is no income whatsoever, and ongoing hardship if they choose to take out a loan and have to face reduced monthly payments while they pay back that loan for the first five weeks.

The situation is that this is an assessment period and no one has to wait to receive a UC payment; an advance of up to 100% is available to those in need, and significant funding has gone to Citizens Advice Scotland.

Some 700,000 households yet to move to UC have insufficient savings to cover that five-week wait, which clearly proves that UC is not working. Will the Minister consider making that advance payment to claimants a non-refundable first UC payment?

As the hon. Gentleman is aware, there is a managed migration pilot in Harrogate, where we are learning lessons, and I take on board the points he makes. That completes at the end of 2020 and, obviously, everyone not in the pilot stays on the legacy system as it currently runs.

One important way for people on UC to build their financial resilience is through regular saving, although that can feel incredibly difficult for those on lower incomes. Does the Minister agree that the Government’s Help to Save scheme, which is precisely for people on tax credits and UC and which provides a 50% bonus on their savings, is a really important tool?

Just today, I met Toynbee Hall and other organisations that are championing the idea of Help to Save. It is making a massive difference, and it is linked to automatic enrolment and to various other schemes we are trying to pioneer in order to ensure that people have savings as well as UC.

I visited my local jobcentre, and it is very positive about the effects of UC. Specifically on financial resilience, how many people have been helped into work and the security of a regular pay packet as a result of UC?

My hon. Friend makes the good point that hundreds of thousands of people have been helped into work, but more particularly this is about the difference between the current system and the legacy system: we now have a dedicated work coach and personalised support; we have scrapped the 16-hour cliff edge; there is more help with childcare; and we have given additional support that was never there under the legacy system.

20. A young constituent of mine could not afford to go to his UC appointment, was sanctioned and then lost his home in York’s resettlement project and ended up on the streets. We were told that the Government would fix the problems with UC as it was being rolled out. Why have the Government not stuck to that commitment?

If the individual case is sent to the Minister with responsibility for UC, they will take that up and respond accordingly.

If people are paid on a four-week cycle, once a year they get paid twice in the same month, which disrupts the UC payment for two months. Will the Minister meet me to see what we can do to prevent these cash flow issues?

I take the point that my hon. Friend makes, in his usual astute way, and I know that the Minister concerned will be happy to have a meeting with him.

21. Several of my constituents have been victims of UC fraudsters, and I have written to Ministers about this on several occasions. I have now received a response to say that only “where there is clear evidence that the claimant had no involvement in that claim”will the Department “consider re-instating legacy benefits” and consider repaying the advance that was made to them. The claimants are being asked to an interview under caution, which is incredibly intimidating, and they have no access to legal advice and support for that. What is the Department going to do to stop intimidating such victims?

As we discussed before the start of questions, the hon. Lady knows that I will soon write to her in great detail on those particular points. The individual issue is being addressed so that there is a much gentler way forward. We are reforming the way that advances are made so that there is no fraud involved in the process.

I hope the Minister will forgive me, but I was hoping to address my question to the new Secretary of State. I am interested to know what she has learned so far about the five-week wait and the damage it does. People have more debt when they come on to universal credit than they had on legacy benefits, and the advance payment is another debt that must be repaid from a meagre amount of benefit, frozen for three years. When is the Secretary of State going to look into getting rid of the five-week wait so that people get non-repayable money into their pockets more swiftly? They cannot wait for five weeks.