My Lords, I will add just a word to my noble friend’s excellent speech. I want to do three things: look at the context, share some new analytical evidence that I have just had access to and, finally, talk about the relationship between Amendments 45 and 46A.
For me, this is a significant moment for universal credit. I am determined to do everything in my power to bring universal credit to a successful, sustainable position if it is the last thing I do before I go to the great Parliament in the sky. This is an important moment. What we are arguing about is part of the strategic balance in the architecture of the system. I believe that the Chancellor, who is fully focused on the public finances, as perhaps Chancellors have to be, is completely blind to family budgets. That is evident in the way that he has been seeking some of the necessary public savings. I know that the Minister is completely innocent in terms of any of these changes. My spies are everywhere, and they actually give him quite high marks. One only had to read the newspapers over the late autumn, sensitively and between the lines, to know that we could have been facing rates of change to the reduction in the benefit of not just 65% but 75%. I believe that to be true and believe that the Minister was responsible for stopping that happening. I am deeply grateful for that. If that had happened, I would have given up any further attempt to make this policy work at all.
We are talking about work allowances and how they fit into the system. We have to get this sorted out once and for all, because although people have been told this before, I believe that in the 2016 fiscal year we will see a massive scaling up of universal credit, not just across all the job centres but in terms of the categories and numbers of claimants that will be admitted. I am anxious that that should happen. However, I make the point that there are a lot of problems waiting on the other side of that, which we know about and have been working on. We have to get the architecture right before the scale-up starts, and work allowances are an essential ingredient.
My noble friend’s amendment actually works with the grain of government policy much better than the Chancellor’s proposal does. The universal credit, making work pay and work incentive momentum will be significantly reduced if these work allowances are reduced in the way that is being suggested.
We are able now to start to look at some of the impacts on universal credit recipients as the rollout moves on. I will very briefly sketch through some analysis I have seen from Policy in Practice, a group of people whose judgment I trust. It has done some forecasting of the effects of the impact of universal credit on recipients. The analysis makes three points. First, with no mitigation plan in place for people currently on universal credit, all households in work and on universal credit in April 2016 can expect to be worse off as a result of reduced work allowances.
It estimates that 96,000 households in work will be worse off by April 2016. I see the wrinkling of a ministerial nose already. I know that this is the Minister’s territory and I am sure that he will want to look at some of these figures, but that is what I am told and I am reading it as accurately as I can.
The second worrying point raised by the Policy in Practice analysis, and with an indirect relationship to the work allowances changes, is the finding that taking into account the national living wage and higher personal allowance—that is, the government package—35% of universal credit recipients will be worse off in 2020 without transitional protection. If that is anything like true, we should be worried.
Even more interestingly, and perhaps more worryingly, the third conclusion of the analysis is that households that are worse off under universal credit would need to work additional hours in order to not be worse off from these changes. Policy in Practice’s current best estimate puts the combined figure at an additional 10 million hours each week across the United Kingdom that would need to be found and worked before people could protect their income in the long run. Worse than that, it then goes on to say that, at the same time, cuts to work allowances will limit the dynamic effect of universal credit by up to 2.5 million hours each week, and that is on top of the OBR estimate that the national living wage will reduce the weekly hours available by a further 1.8 million hours each week.
If you combine these factors, we are looking at the possibility of making it more difficult for households to make up their shortfall by working additional hours. I am sure that that will all be tested in due course when the figures are made available. However, that is the scale of the challenge that we may be facing as a result of some of these work allowance changes. I am certainly concerned that this is a significant change that we need to think about very carefully.
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We will be looking across the House for support— my noble friend adverted to this—but my spies in the Labour Party tell me that it might be setting its face against this amendment should my noble friend wish to test the opinion of the House. I find that surprising, if it is true, because I made a point of following the excellent speech made by Emily Thornberry on 19 November 2015 in the House of Commons First Delegated Legislation Committee. Ms Thornberry is obviously a rising star because she is now shadow Secretary of State for Defence. In her excellent speech she confessed that she cannot put IKEA BILLY bookcases together, which might be slightly worrying in someone who might be running the defences of the country. However, I have sympathy with her because I could not either.
Ms Thornberry made an important speech. She was trying to resist exactly the same regulations that are the subject of my noble friend’s amendment. She started by saying that the Opposition do not support the regulations. These are the same regulations and that was on 19 November. She made a truly excellent speech—I could not have made a better one myself—in which she rehearsed the history and talked about the 2009 CSJ version of dynamic benefits, which was the
forerunner to universal credit. She described it as the “Old Testament” of universal credit. I am not sure about that; I will need to ask my minister at the weekend. She went on to look at the 2010 version of the White Paper. She supported that and a more generous disregard because she thought it would make work pay. She said that these regulations would turn the “disregard making work pay” argument on its head. She complained effectively, as we have here, as I have myself, about the lack of adequate impact assessment. She referred to the consequences, with special reference to single parents, and we heard something about that in the earlier stages of the Bill. She cited extensively and effectively from a range of expert organisations in support of her case that these regulations were not sensible. She ended with a sentence which says it all:
“These cuts will not be passed unchallenged. The Opposition will be voting against them today”.—[Official Report, Commons, First Delegated Legislation Committee, 19/11/15; col. 6.]
My question to the Labour Front Bench is this: if that was its position on 19 November, what is its position today? Having given consideration to these two amendments together, I believe that Amendment 45 is more strategically significant and important than Amendment 46A.
I speak only for myself but if the Labour Party is not going to support my noble friend if she presses Amendment 45, that would be deeply disappointing. It is not for me to tell the Labour Party how to vote but its Front Bench can be asked about what has changed since 19 November and whether it changes the approach that the Labour group will be taking on work allowances in UC in future. That, for me, is the significant question contained in these amendments.
Constructive opposition is not the exclusive prerogative of any opposition party on its own. Some procedural give and take would add value to collective opposition and would make the constructive opposition that we try to deploy in this House more effective. It is on that basis that, of the two amendments Amendment 45 is by far the most significant. I will be delighted if my noble friend presses it to a Division and I will follow her happily into the Lobbies.