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Universal Credit £20 weekly increase must be extended, says Westminster committee

The Chancellor must maintain for another year ‘at the very least’ the £20 per week increase in Universal Credit (UC) and Working Tax Credit introduced to support families during the coronavirus pandemic, MPs say today.

Work and Pensions Committee calls for year-long extension of increase ‘at the very least’
Removal in April while pandemic still being felt would plunge hundreds of thousands of families into poverty
Any plans to replace rise with one-off payments must be abandoned amid concerns over fraud and impact on vulnerable

The report from the Work and Pensions Committee notes that since March the number of people claiming UC has doubled to around six million, while job vacancies remain far below pre-pandemic levels.

It warns that removing the payment as planned in April, while the effects of the pandemic are still being felt, would ‘plunge hundreds of thousands of households, including children into poverty’ while dragging those already in poverty ‘down into destitution’.

While the Committee recognises that continuing with the increase would come at a ‘substantial cost’, the Committee argues that this should be seen in the context of the Treasury’s own £280bn figure for total spending on coronavirus support measures this year. The Joseph Rowntree Foundation has estimated that keeping the £20 rise would cost around £6.4bn in the next financial year.

The report also calls on the Government to abandon any plans for one-off payments to replace the weekly rise. The Secretary of State confirmed to the Committee last week that the DWP had been asked to investigate such an option but said it was not ‘one of the Department’s preferred approaches to providing that financial support’.

The report has been published after evidence sessions with frontline support organisations and policy experts and the Secretary of State and Permanent Secretary last week.

Rt Hon Stephen Timms MP, Chair of the Work and Pensions Committee, said: “Removing the extra payment in March would represent a failure by Government – failure to recognise the reality of people struggling.

“Without regular support, hundreds of thousands of families will be swept into poverty or even destitution. Government must end the uncertainty and commit to extending this lifeline.

“The Chancellor faces difficult decisions about the public finances. He may find it hard at present to make the increase permanent. But the pandemic’s impact on the economy and livelihoods will, sadly, be with us for some time. An extension for a year should be the bare minimum.

“We must also hope that Rishi Sunak will listen to the groundswell of arguments against one-off payments as an alternative, including from his cabinet colleague at our Committee last week. There is broad agreement that a steady income is necessary to support people.”

Report findings and recommendations

Impact of removing the £20 per week increase (Chapter 2)

Analysis by the Joseph Rowntree Foundation (JRF) has concluded that withdrawing the temporary increase ‘will risk sweeping 700,000 more people, including 300,000 more children, into poverty’

One-off payments (Chapter 3)

The Committee shares the Secretary of State’s view that a steady income is the best way to support people and is concerned that one-off payments could increase the risk of fraud and about the risks to vulnerable people.

The proposed way forward (Chapter 4)

The Committee has previously called on the Government to make the £20 per week increase permanent with annual inflation-based increases. The report acknowledges however that ‘in the short term, the Chancellor faces some very difficult decisions about the public finances amid a great deal of uncertainty about the future.’
If the Chancellor cannot yet commit to making the increase permanent, he should at the very least extend it for a further 12 months. The Government should then announce its future plans for the rate of Universal Credit no later than the Autumn Statement 2021, to give claimants enough time to plan and budget.

Substantial reform of Universal Credit needed, says Lords report

The House of Lords Economic Affairs Committee report ‘Universal Credit isn’t working: proposals for reform‘, calls on the UK Government to make substantial changes to universal credit in order to protect the most vulnerable.

Universal Credit is failing millions of people, particularly the most vulnerable. The Economic Affairs Committee agrees with the original aim of Universal Credit but blames the scheme’s design for soaring rent arrears and the use of food banks.

Cuts to social security budgets over the last decade is causing widespread poverty and hardship. Universal Credit needs urgent investment to catch up and provide claimants with adequate income. The temporary increase in the standard allowance in response to the Covid-19 pandemic shows that the previous level of awards was too low. The increase should be made permanent.

The Government is using Universal Credit to recover debt, mostly £6 billion of historic tax credit debt. Deductions of up to 30% of the standard allowance, and in some cases more, can be taken from claimants. This has left many households with less money than they are entitled, often at no fault of their own. Tax credit debt should be written off as it is unlikely to be repaid.

The five-week wait for the first Universal Credit payment is the main cause of insecurity. This wait entrenches debt, increases extreme poverty and harms vulnerable groups disproportionately. The Government should introduce a non-repayable two-week grant to all claimants.

The way payments are calculated can result in large fluctuations in income month-to-month, making it extremely difficult for claimants to budget. The level of awards should be fixed at the same level for three months. There should be a mechanism to enable claimants to have an early reassessment if their circumstances change.

Lord Forsyth of Drumlean, Chair of the Economic Affairs Committee, said: “Most people, including our Committee, broadly agree with the original aims and objectives of Universal Credit. However, in its current form it fails to provide a dependable safety net. It has led to an unprecedented number of people relying on foodbanks and not being able to pay their rent.

“The mechanics of Universal Credit do not reflect the reality of people’s lives. It is designed around an idealised claimant and rigid, inflexible features of the system are harming a range of claimant groups, including women, disabled people and the vulnerable.

“Universal Credit needs more money to catch up after 10 years of cuts to the social security budget. It requires substantial reform to its design and implementation, the adequacy of its awards, and how it supports claimants to navigate the system and find work.

“The five-week wait for a first payment must be replaced by a non-repayable two-week grant to all claimants. The monthly payment calculations which can result in big fluctuations to claimants’ incomes should be fixed for three months. Historical tax credit debt needs to be written off.

“The punitive nature of Universal Credit has not worked. It punishes the poorest by taking away their sole source of income for minor infractions. It needs rebalancing, with more carrot and less stick, particularly as large numbers of claimants will have ended up on it because of events completely out of their control.”

The Committee’s other key findings and recommendations include:

The Government must prioritise helping people into work, particularly with the increase in unemployment that the Covid-19 pandemic is causing. All claimants should have a work allowance, at a higher rate than now, to allow them to keep more of their award as they move into work.
The Government should consider reducing the taper rate to ensure that the poorest in society do not pay higher marginal effective tax rates compared to the richest in society.
The conditionality requirements on claimants who can look for, or prepare for work, has been increased significantly over recent years. Less emphasis should be placed on obligations and sanctions. Instead, there should be more support to help coach and train claimants to find jobs or to progress in their current roles. Conditionality should be adapted to accommodate changing labour market conditions, including at the local level, particularly in the light of the economic impact of the Covid-19 pandemic.
The UK has some of the most punitive sanctions in the world, but there is limited evidence that they have a positive effect. Removing people’s main source of support for extended periods risks pushing them further into poverty, indebtedness and reliance on food banks. There is a substantial body of evidence which shows that sanctions harm people’s mental health. The Government should evaluate the current length and level of sanctions. It should also expedite its work on introducing a written warning system before the application of a sanction. Sanctions must be a last resort.
The Government is doubling the number of work coaches in response to potential levels of high unemployment. This may not be enough to support people to find work in a stagnant labour market with high levels of competition for jobs. A cap should be introduced on the number of cases for which each work coach can be responsible.
Paying awards on a monthly basis does not reflect the way many claimants live. It causes unnecessary budget and cash flow problems. All claimants should be able to choose whether to have Universal Credit paid monthly or twice monthly.
Including childcare support in Universal Credit was a mistake. Paying costs in arrears has been a barrier to in-work progression and in some cases, it has been a disincentive to work. The Government should remove childcare support from Universal Credit and be made into a new standalone benefit paid in advance.

Care Homes were ‘thrown to the wolves’

The UK Government’s “slow, inconsistent, and at times negligent approach” to social care in the Covid-19 pandemic has exposed the “tragic impact of years of inattention, funding cuts and delayed reforms”, leaving the sector as a “poor relation” that has suffered badly in the pandemic.

The Public Accounts Commons Select Committee is demanding from Government a “3-point plan” by September, ahead of the second wave, covering health, the economy & procurement of medical supplies and equipment.

This was illustrated early on by the “appalling error” committed when 25,000 patients were discharged from hospitals into care homes without ensuring all were first tested for COVID-19 – even after there was clear evidence of asymptomatic transmission of the virus.

Thanks to the commitment of thousands of staff and volunteers and by postponing a large amount of planned work, the NHS was – just – able to weather the “severe and immense” challenges to health and social care services in England and meet overall demand for COVID-19 treatment during the pandemic’s April peak – “unfortunately, it has been a very different story for adult social care”.

The Committee is particularly concerned about staff in health and social care “who have endured the strain and trauma of responding to COVID-19 for many months” and who are now expected to “cope with future peaks and also deal with the enormous backlogs that have built up”.

Failure to protect staff by providing adequate PPE has hit staff morale and confidence, while a lack of timely testing led to increased stress and absence. These same staff will be called upon in the event of a second peak and the NHS will need extra staff to deal with the backlog of treatment.

As well as its calls for a “second wave ready” plan, for health and the economy, the Committee expects an account to be provided in September of the spending under “policies designed to create additional capacity quickly” which – while necessary, especially in the haste the Government was acting in – have resulted in “a lack of transparency about costs and value for money”.

Meg Hillier MP, Chair of the Committee, said: “The failure to provide adequate PPE or testing to the millions of staff and volunteers who risked their lives to help us through the first peak of the crisis is a sad, low moment in our national response.

“Our care homes were effectively thrown to the wolves, and the virus has ravaged some of them.

“Vulnerable people surviving the first wave have been isolated for months, in the absence of a functional tracing and containment system. Yet there were bold and ambitious claims made by ministers about the roll out of test, track and trace that don’t match the reality.

“The deaths of people in care homes devastated many, many families. They and we don’t have time for promises and slogans, or exercises in blame. We weren’t prepared for the first wave. Putting all else aside, Government must use the narrow window we have now to plan for a second wave. Lives depend upon getting our response right.”

Government urged to learn lessons from gaps in worker and business support

Darren Jones, Chair of Westminster’s Business, Energy and Industrial Strategy (BEIS) Committee, has written to Secretary of State Alok Sharma outlining a number of key issues for the UK Government to address in its approach to support for business and workers as the country emerges from the Covid-19 lockdown.

The correspondence to the Secretary of State recognises the efforts of many workers and businesses who rose to the challenges brought about during the pandemic.

The letter also highlights a number of issues, including gaps in support for workers, the tapering of support for workers through the Coronavirus Job Retention Scheme (CJRS), and the treatment of workers during the pandemic and health & safety issues.

The letter tackles a number of areas concerning the Government’s support for businesses, recommending the Government review the success of the various loan schemes and the behavior of banks, and also highlighting problems arising from unpaid business rent and the calls for targeted support for sectors that are likely to continue to be hit by restrictions which threaten their future revenue and viability.

Darren Jones, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee said: “The Business Department and the Treasury deserve significant credit for their efforts in addressing the unprecedented challenges faced by business and workers following the impact of Covid-19.

“Given the evolving situation around Covid-19, it’s inevitable that issues would emerge concerning the effectiveness of the Government’s support package and its impact on workers and businesses.

“However, it is also the case that the alarm over gaps in the Government’s support, such as for women, and those affecting freelancers and agency workers, were being raised repeatedly by those affected and yet these warnings continued to go unheeded.

“Rishi Sunak echoed a previous Chancellor in suggesting that the coronavirus has seen us all in it together. However, it’s clear that the reality of the economic lockdown is that its impact has not been shared out evenly and that it is falling very heavily on some parts of our economy.

“For example, we heard from sectors, including retail, the creative industries and manufacturing, who expressed concern over increasing redundancies in the wake of the furlough scheme changes coming in this weekend.

“It’s clear that some sectors of our economy will continue to face very challenging conditions. The shutdown of the aviation and aerospace sector will, for example, have a longer-term impact on these industries compared to others. In some parts of hospitality and in other sectors too, difficult trading conditions and continuing restrictions threaten future revenue and their viability.

“It’s important the Government quickly learns the lessons of recent months so that they can act in future with more policy sophistication and transparency and be able to step up and deliver the most effective support possible to workers and businesses.

“If we face the prospect of a second-wave and the likelihood of increased local lock-downs, it’s essential the Government looks again at its approach to sector support and to the additional measures which will be necessary to secure our economic recovery, help businesses prosper and enable workers to protect their livelihoods”.

The letter to the Secretary of State notes the examples highlighted by Which? of price-gouging, profiteering, and the inability of consumers to obtain refunds which they were legally entitled to when their holidays and flights were cancelled.

The correspondence also notes the comments from Lord Tyrie, former Chairman of the Competition and Markets Authority, stating that the pandemic had revealed that the CMA needed new powers to deal with profiteering.

The Committee calls for the Government to undertake a review of the powers and responsibilities of the CMA, and other consumer regulation enforcers, to address bad business practices and the effective enforcement of consumer law and the action needed to tackle market abuses, such as profiteering, that took place during the pandemic.

The letter to the Secretary of State highlights issues around the impact of late payments and the problems that many small businesses were experiencing throughout the UK’s supply chains because of cash flow problems.

Following evidence from SMEs, the Federation of Small Businesses (FSB), and the Small Business Commissioner (SBC) on these issues, the Committee recommends the SBC be given additional powers to proactively investigate late payments, that the Prompt Payment Code be made compulsory, and that late payers should be excluded from government contracts.

Sue Davies, Head of Consumer Protection at Which?, said: “Our research has highlighted terrible practices during the coronavirus pandemic, including airlines that have refused to refund passengers and sellers that have unjustifiably bumped up prices on essential goods.

“In too many situations consumers have been left with nowhere to turn, which is why regulators need to be given stronger and more targeted powers so they can take effective enforcement to tackle the types of bad practice we’ve seen during the crisis.”

MPs call for tougher restrictions on phone use in cars

The Government should consider tougher restrictions on driving while using a mobile phone and stricter enforcement of the law to prevent the ‘entirely avoidable’ tragedy of deaths and serious injuries from related crashes on the roads, MPs say.

‘Receiving and sending data equally dangerous’

In Road Safety: driving while using a mobile phone, the Transport Committee says the evidence is clear: using a mobile phone while driving is dangerous, with potentially catastrophic consequences.

MPs call on Government to overhaul current laws on using hand-held mobile devices while driving, to cover use irrespective of whether this involves sending or receiving data.

As evidence shows that using a hands-free device creates the same risks of crashing, the Committee also recommends that Government explores options for extending the ban on hand-held devices to hands-free phones.

In 2017, there were 773 casualties, including 43 deaths and 135 serious injuries, in collisions where a driver using a mobile phone was a contributory factor. The number of people killed or seriously injured has risen steadily since 2011.

Tougher enforcement needed

However, the rate of enforcement has plunged by more than two thirds since 2011. Enforcing the law is essential to ensuring that motorists do not illegally use their mobile phone while driving. While the Committee welcomes the Government’s review of roads policing and traffic enforcement, the report calls on the Government to work with police to boost enforcement and make better use of technology.

The penalties for using a hand-held mobile phone while driving were increased in 2017 but still do not appear to be commensurate with the risk created and should be reviewed and potentially increased so that it is clear there are serious consequences to being caught, says the Report.

Chair of the Committee, Lilian Greenwood MP, said: “Despite the real risk of catastrophic consequences for themselves, their passengers and other road users, far too many drivers continue to break the law by using hand-held mobile phones.

“If mobile phone use while driving is to become as socially unacceptable as drink driving much more effort needs to go into educating drivers about the risks and consequences of using a phone behind the wheel. Offenders also need to know there is a credible risk of being caught, and that there are serious consequences for being caught.

“There is also a misleading impression that hands-free use is safe. The reality is that any use of a phone distracts from a driver’s ability to pay full attention and the Government should consider extending the ban to reflect this.

“Each death and serious injury which results from a driver using a mobile phone is a tragedy that is entirely avoidable. We need tougher restrictions, better enforcement and more education to make our roads safer for all.”