Oral evidence: Universal Credit, HC 1183

Oral evidence, 9 July 2018.

Witnesses

Sophie Corlett, Alison Greenhill, Tony Kirkham and Emma Revie.

Chair

Good afternoon and welcome to the Public Accounts Committee on Monday 9 July 2018. We are here to look at the Government’s handling of Universal Credit, particularly off the back of a National Audit Office Report on the subject. This is our first time looking at it for over a year. We have been giving it time to settle in. Just to remind everyone, Universal Credit is rolling six benefits into one, and it began in the coalition Parliament. It was originally scheduled to complete in October 2017, but as we know it has faced a number of delays, and its latest completion date is 2023. Not yet 1 million of the 8.5 million claimants have moved from legacy benefits to Universal Credit. There is an awful lot of noise around this, as we have picked up in the last week. The Department claims it is working, although its own research says that four in 10 claimants are experiencing financial difficulties. That is one of the reasons why I am here to introduce our first panel. We wanted to get people who are right at the coalface of dealing with Universal Credit. I am delighted to welcome Alison Greenhill, who is the director of finance at Leicester City Council and a member of the Society of Municipal Treasurers. I think you were president until March this year. Is that right?

Alison Greenhill

Yes.

Chair

Tony Kirkham is the director of resources at Newcastle City Council and the current president of the Society of Municipal Treasurers. Two of you at once—we are very honoured. Then we have Emma Revie, who is the chief executive of the Trussell Trust, which runs food banks up and down the country, including in my constituency—thank you for that. Sophie Corlett is the director of external relations at Mind. I want to kick off by asking each of you to say from your experience how well you think Universal Credit is working and what the impact is on claimants and your organisations. If you feel you are repeating yourself, don’t. You can always just say, “I agree,” and then we will get through more work. I will start from my left to right—Alison Greenhill.

Alison Greenhill

Thank you, Chair. Leicester is relatively new to the table. We started with live service, which is for single claimants and new claimants, in January 2016. We actually only went to full service three weeks ago. That limited experience over the two years is important for the preparation for full service, which I had anticipated to be based on what has happened elsewhere and some learning curves, given what I’ve read and obviously talked about with my colleagues. I stress that local engagement with our colleagues in the DWP has been excellent. There is definitely a genuine collaboration and a want to work for the benefit of the people in the area. More difficult has been national engagement and learning from the impact of what we have seen elsewhere. Tony is better placed to tell you what is happening with full service, but in just three weeks we already have two eviction notices from landlords. The expected case load was 603 weeks. It is 1,200, and therefore the level of local authority support required has been significant.

Chair

The expected case load was 600?

Alison Greenhill

It was 600, but it is now 1,200. To some extent, we are prepared for a larger case load, because I would rather be over-prepared than under-prepared.

Chair

Is that a case load of people with eviction notices?

Alison Greenhill

It is all those migrating from HB. It was a shock to me how quickly—in three weeks—private landlords became nervous about the impact of Universal Credit, particularly the delay in rent payments. A couple of quite big issues remain unresolved, including the impact on local authorities. I know that the National Audit Office Report suggests that there is an additional burden on local authorities. In Leicester, three city centre Jobcentre Plus sites within a quarter of a mile of one another means needing three lots of resource to try to support claimants coming in, which means three lots of housing officers—£250,000-worth—in all our three sites to make sure that the resource is there to support people. One area that the Report does not cover but which has a significant impact is those people who have historically been overpaid housing benefit and have an attachment to the benefit going forward. When moving to Universal Credit, that attachment to benefit falls away. Leicester City Council has £4.5 million of attachment to benefits. Since January 2016, when live service started, I have made 296 applications to the DWP for an attachment to Universal Credit, and not one has been successful.

Chair

So you have to reapply for the attachment to benefits?

Alison Greenhill

I have to ask the DWP to approve an attachment to UC.

Chair

So all the old ones fall away and you have to start again, effectively?

Alison Greenhill

As someone moves to Universal Credit, it is easier to be my benefit to be able to attach to. That is £4.5 million on the council’s balance sheet so that, I think it would be fair to say, when that individual or family move on to Universal Credit , the likelihood of me getting that attachment, and therefore of that debt being repaid—given that those are still benefit households—is virtually zero, and that is multiplied by—

Chair

I will let the others come in and then we will come back to this. We have two local authority witnesses.

Tony Kirkham

We are a bit further down the line. We were one of the first core cities to go down this line, so we were pretty much in full service, apart from a few postcodes, throughout 2017-18, with around 7,800 people currently accessing Universal Credit. I echo some of the things that Alison picked up on. I will take you through more of our housing experience. Newcastle has 26,700 homes in our ALMO. We now have just over 4,500 people on Universal Credit on that basis. Our experience with those rent accounts is that that cohort of people had arrears of around £1 million previously. That has more than doubled to £2.1 million over that period. However, by working with the household, we have managed to move the collection rate up to around 93%—we are into a steadied state; it averaged around 75%—we normally have a collection rate of about 98% or 99% for people outside of Universal Credit.

Chair

Are those notional arrears because of a delay, or are people choosing to spend the money?

Tony Kirkham

They are being driven by a number of aspects. The delay is certainly a part of it. If you look at the case studies—I am sure we will not have time to go into the individual case studies—you can see people not understanding their position initially, the delay coming through, a lot of to-ing and fro-ing, and support from ourselves in relation to getting the correct position in the longer term. We have a number of people in that situation, who have never dealt with money, so debt advice and support is required. The scary statistic is that when we have sat down and put people through the debt support, nearly 45% of those people do not have a sustainable plan going forward. Their circumstances will have to change, in that they will have to go into employment in some way, or they will have to reduce their housing costs and their basic core costs. We have seen a significant increase in rent arrears, but because we are the housing landlord in that situation, we have been able to take a longer-term view, to work with the residents in relation to putting that forward. We spent nearly £0.75 million last year on that support alone. We wrote off £0.5 million of council tax in relation to those through hardship. We also made hardship payments of around £50,000. That is the real front end, where we are basically giving people vouchers for food. The private landlords, as Alison suggested, are less keen to be in that space, and to give people that time and flexibility to get used to not only a new system, but a lower income base. In Newcastle, we calculate that welfare reform will take about £110 million out of the city when it is fully formed and, on top of that, another £12 million to £13 million in rent, which would have been reinvested back into the system.

Luke Graham

Can you talk us through how that £110 million was calculated?

Tony Kirkham

That comes from the various work streams. As you know, there are quite a few in relation to Universal Credit. They include the bedroom tax, tax credits, disability benefits, child benefits, sickness benefits, a benefit cap and council tax benefits. Those are all various changes, which are programmed as part of welfare reform. We can certainly pull our evidence together.

Chair

It would be helpful if you could provide us with that.

Luke Graham

That would be great. The reason for my question is that the whole point of the Government proposition will be that if more people get into work, the welfare cost would go down. I am keen to understand what the volume is and then what the rate is, so it’s almost having a new rate for each. If you have a breakdown of that, that would be very useful.

Tony Kirkham

We have put that into our previous responses. Just in relation to the landlords, you are now getting a situation where landlords are saying that they will not accept people on Universal Credit. In Newcastle we have a sponge—as I call it—of 26,000 homes. My concern is for other core cities that do not have the ability to soak up that pressure as they go through this experience.

Chair

Because you have fewer people in the city centre wanting to live in council housing than in London, for instance.

Emma Revie

Our evidence would support the findings of both local authorities. Last year, we distributed, through our 428 food banks, 1.33 million three-day emergency food supplies. We collect quantitative data every day. Live data is gathered in each and every one of our food banks. We analysed that data to see if there was an impact from Universal Credit. Looking back, in areas where Universal Credit was in full roll-out for 12 months or more, we saw a 52% increase in footfall, compared with areas where Universal Credit was either not in full roll-out or had been in for less than three months, where we saw a 13% increase. There was a significant increase in areas where Universal Credit was in full roll-out. Looking to understand that further, we carried out another piece of qualitative research, to look at what some of the drivers were. We spoke to people within our food banks, who had gone on to Universal Credit in the recent past. In response to your question on whether it is working and what the impact was, our data showed us that 70% of respondents who had gone on to Universal Credit had gone into debt in the initial waiting period, while they were waiting for their initial Universal Credit payment. Our research also showed us that that debt continued. Even where advance payment could be made, what our respondents were telling us was that it was too costly to repay, going over a period of time, so it just pushed the ball slightly further down the field. In fact, our research was showing that people were having to borrow, often, from friends and family to see out the initial waiting period. Their payment came in and that was used just to pay back friends and family. Therefore, the debt increased and went on further. Our research showed that 57% of people, during the initial wait period, were experiencing physical and mental health problems as a direct result of that wait, and 56% of people were incurring rent arrears or facing the possibility of being evicted from their homes, which I think backs up what we have been hearing from local authorities. On food bank use, Oxford University did some research with us over 18 months, tracking our data against other data from the DWP and other sources, and one of the things they were able to say to us was that food bank use is an indication of destitution, because in the month before somebody comes to a food bank, on average they will only have earned £319, so these are people who, by any stretch of the imagination, can be described as vulnerable at the point where they are coming into the system and, as a result of going into the system, coming into food banks. In terms of other issues that people are experiencing when coming on to Universal Credit, there are issues with the administration of the system. Our research showed us that there were significant issues with communication, with 30% of people saying they were not getting the information they needed in order to know what was going on. Again, I think that refers back to what Tony was saying, in terms of people being able to understand what the ramifications were of moving into the system. That is a real problem and causes a lot of mental hardship and a lack of ability to plan. No universal support was what we were hearing. Universal support is the system that people should be able to expect at the point where they go on to Universal Credit, and 63% of respondents had been offered no support at all; 8% of respondents told us that they had been offered some statutory support, but only 8%. The next highest offer of support they were given was a voucher to go to a food bank. I would say that on the ground people are not aware of universal support, which is not about providing debt advice, which is the most pressing need, with 70% of people going into debt at the point where they go on to—

Chair

We will come back to you with some specific questions, but it is very helpful to get the background. What was the number of respondents? You talk about the percentage; what was the total number?

Emma Revie

We surveyed 278, so it was a very small number. It was meant to be very much qualitative. The data on our 52% increase for Universal Credit is across all food banks.

Chair

Roughly, what number is that, so that we can get an idea of the scale?

Emma Revie

If you can tell me 63% of 278—

Chair

Oh sorry, no, the first number. You said you had the quantitative data, for all your visitors to food banks.

Emma Revie

We distributed last year 1.33 million—

Chair

So the first figures you gave were on the basis of 1.3 million.

Emma Revie

All—yes, absolutely.

Chair

But the second—

Emma Revie

Was our deep dive—

Chair

Have you had it analysed? Is it statistically valid?

Emma Revie

Absolutely, for us to raise those—it was meant to be an indicative study.

Chair

So it’s more qualitative. You wouldn’t expect it to be quantitatively correct; it’s qualitative.

Emma Revie

It’s quantitative.

Chair

Just to be clear, what are the figures?

Emma Revie

I think what often happens in this situation is that the 52% is disregarded, because of the qualitative. What we wanted to do with that was be able to speak to the Department about what we were seeing and hearing—to articulate that.

Chair

We’ll come back with more specific questions; Mr Snell will come in in a moment and we’ll work round. Ms Corlett.

Sophie Corlett

We have 130 local groups across England and Wales, and 20 of those do very specific work on benefits, although most of them are supporting people in one way or another with benefits—benefit claims or the fallout from a benefit claim—and we also take calls into the office, so that is where our information is coming from. It’s much more anecdotal, but there is a lot of it. The people we are talking to are experiencing considerable hardship and considerable deterioration in their mental health. They struggle with the process, and I’ll explain a little bit what I mean by that, but broadly, they end up tangled in the process and unable to dig their way out of it. They struggle with the online application. They struggle with conditionality—the conditionality that comes while you wait to get your work capability assessment. In theory, that conditionality can be lifted, but it isn’t necessarily. They struggle with waiting for their first payment and then, if they are able to get an advance payment, they struggle to pay that back. Particularly people with mental health problems who have been out of work for some time struggle to apply. Five weeks from the claim may be quite a number of weeks from them starting a claim, because the claim fails and they have to do it again. They have not put the right information in, or whatever it is. If they get the money in advance, they are not able to pay it back. They are at a very low point with their income, and it just puts off the evil day. You have to pay it back. They find that they are borrowing from friends and family, and they are struggling with accommodation or whatever. They struggle with the monthly budgeting. They do not find that they are being automatically offered it fortnightly. They struggle with the online journal, because it is online and because of the fear of the requirements that are popping up on that. People talk to us about the fear of something popping up on that that they might miss, and the need to be eternally vigilant and constantly looking at it. A number of stories of things that have happened on the online journal really indicate why that would be. One woman went off to an appointment at the job centre and when she got there they said, “Oh no, you’re late,” or “No, it’s cancelled.” I think it was cancelled. She said, “Well, I didn’t know.” The appointment was for 10.30; the online journal prompt had come at 10.15 saying that it was cancelled. There are all sorts of things like this, and people feel that they are about to be caught by it.

Chair

Are you saying that there is an assumption that people are living off their phones and are online the whole time?

Sophie Corlett

There is that assumption, and many of these people will be people who are quite capable of operating online, and others not. They may have had to set up appointees.

Chair

They may be online, but not online permanently.

Sophie Corlett

Or not online very often. There are a whole string of things with everything being online. A lot depends on work coach discretion rather than automatic things that the work coach should prompt to ask. You either have to know to prompt your work coach, and then your work coach might not believe you or give it to you. There seem to be eligibility rules that you do not know your way around. It is all that sort of bureaucratic entanglement that means that people struggle financially, but their trust in the work coach is really undermined. It has a massive impact on people’s mental health.

Chair

It take a while to correct from that.

Gareth Snell

Ms Greenhill, you mentioned that the DWP have rejected all your requests for attachments to benefits. I presume that is council tax arrears and rent arrears that you were trying to claim back, or are there other things?

Alison Greenhill

It is purely overpaid housing benefits.

Gareth Snell

Fine. Did they ever give any reasons why they were rejecting those particular attachments?

Alison Greenhill

I think it would be fair to say I would be speaking on behalf of other colleagues. I am not aware of any. I am not saying that they have not. I can certainly confirm that with the Committee.

Chair

It would be helpful to know.

Gareth Snell

A question for both Ms Greenhill and Mr Kirkham. You are the treasurers of your local authorities, aren’t you? In terms of your internal budgeting, how much are you setting aside, or did you set aside initially, either in reserves, or through reducing collection rates or estimates of income to compensate for the impact of Universal Credit?

Tony Kirkham

In relation to our council tax collection rate, we have the best in the core cities. We previously had the best in the north-east as well. We basically lost 1% in collection through Universal Credit, so you are looking at about £1 million. We have written off £500,000 of that in 2017. At the same time, we lost £300,000 in the various different grants for supporting this type of activity. I have had to make that good out of council’s money, because we have not seen that downturn in activity. Wearing my other hat, the ALMO Your Homes Newcastle set aside £4 million as part of the HRA for welfare reform. To date, we have spent £2.1 million of that.

Gareth Snell

Is that spend a mixture of helping people to stay in one of your properties and—as you must have budgeted for with your ALMO hat on—a loss of rental income overall, writing down your base?

Tony Kirkham

The way that the housing revenue account works, as you know, is as a ring-fenced account so, yes, we have to make assumptions around the level of income that we will have. Similarly, as suggested in relation to council tax, we are probably looking at about a 1% reduction in collection overall, when we take into account where we think we will be with the full roll-out of Universal Credit—i.e. the level of numbers we will get t.

Gareth Snell

I appreciate that you may not be able to answer this question, but I will ask it anyway. How much less in pounds is your average social rent than the average private sector rent in the city? Presumably your local housing rate.

Tony Kirkham

I cannot answer that one off the top of my head. I am sorry.

Chair

We can find that out. Did you want to ask Ms Greenhill?

Gareth Snell

Yes. Do you happen to know the answer to any of those questions, Ms Greenhill?

Alison Greenhill

I cannot answer the housing rate or rent question, but I am happy to let you have that. In terms of council tax, I have just gone full service, so I am optimistic about maintaining our level of council tax collection, bearing in mind that we took the maximum increase for council tax this year of 6%, so the amount that I am meant to be collecting is more. That said, we have set aside £4 million in reserves to support the general welfare reform agenda, which is benefit income cap, discretionary housing payments and bedroom tax in particular. With regards to council housing, I estimate a £1.2 million reduction in rent collection.

Gareth Snell

Have you put any temporary additional resource into your revs and bens department, or whatever your equivalent might be, in order to help people transition? Or have you given more open access to computers in your libraries, or the sorts of things that may not be recorded in a traditional report but are actually a cost associated with Universal Credit?

Alison Greenhill

There are two parts. The housing benefit administration grant has reduced year on year, so in 2013-14 my grant was £2.8 million, and in 2018-19 it is £1.4 million. It is 50% less but I have only had an 8% reduction in caseload in that period. Yes, we are supporting housing benefit administration, an additional support in communities with digital support, and the adult education service, particularly around digital inclusion and language skills. In Leicester, having a minority ethnic majority, it is not just about vulnerability; we have a very mixed community, so it is about digital awareness and, particularly, language barriers and community issues. Housing is an additional cost. One of the things that I did want to say was about the run-on from transferring from housing benefit to Universal Credit. What was a fairly automated system between the DWP and the local authority for housing benefit—through something called ATLAS—is now very manual. I think we have seen something like a 3,000-person-hours increase from manually processing paperwork—

Chair

Is that 3,000 hours over the time you have been live?

Alison Greenhill

Yes.

Chair

Just in those few weeks—3,000 additional hours.

Alison Greenhill

Yes. An immense number of documents come through for an individual’s household. It can be all manner of documents for someone who is now claiming Universal Credit and we have to check manually. So the answer is yes.

Gareth Snell

Last point, Chair. The NAO Report says that the DWP has offered to reimburse costs where local authorities can evidence those costs. I do not know whether that is a scheme that either of you have attempted to access; if you have, have you found it easy to navigate? Again, forgive me, certain costs can be argued to be associated with the roll-out of Universal Credit that may look like enhancement of day-to-day activity of a good local authority. I wonder whether you have had problems recouping any of your costs centrally.

Tony Kirkham

We certainly presented them with evidence around the various different assumptions made and the amount of time and support for individuals. That has not influenced the level of grant that we have received for payment. But that statement came out only recently, so we are keen to see how we best manage that.

Alison Greenhill

We have seen the opposite effect. One of the grants made available by the DWP was for personal budgeting support. My welfare advice provider, which is the national organisation Citizens Advice, could not provide it for that level of funding. I went back to the DWP and said, “I can’t do it for that,” so they have not provided it at all. Rather than them reviewing the amount of money they were going to give me so I could provide a local offer for individuals to receive personal budgeting advice, there is no local offer.

Shabana Mahmood

This question is possibly for the whole panel, but it is for Ms Revie in particular. You have obviously collected a lot of data. How would you characterise the Department’s response to your attempts to engage with them and learn some of the lessons that are coming out of the data that you are collecting across your organisation?

Emma Revie

We have definitely seen increased engagement, and over the past few years our engagement with the Department has been more and more positive. Members of the Department and Ministers have visited food banks, which has been great. It is always much easier to have a conversation when it is about the reality on the ground and one has seen the reality on the ground. That has been very much appreciated by us, and it means we are having a conversation about what is real. We have used our data to have really positive conversations, and in the light of the NAO Report we really want to do that further. It is a system we want to see work. It does not encourage us to hear that a local authority does not have money for universal support. We want to find a solution that will make that work.

Shabana Mahmood

Obviously, it is helpful when people see the reality on the ground—it is easier to deny that from far away, here in Westminster. Have any other positive changes come as a result of those positive conversations? Do you feel you have been able to make a difference to any part of the Department’s approach to the operational bit of Universal Credit?

Emma Revie

We have seen changes in the past. We very much appreciated the £1.5 billion that went back into the system in terms of reducing the one-week waiting time, and there have been other changes. There has most definitely been engagement. We would obviously welcome further engagement. We are aware that we are representing a particular group of people. We know food banks. We know people who come into our food banks. That is the data we collect and the story we are telling. It is about that group of individuals, who represent groups in society that are over-represented in our food banks: single parents, families with multiple children, people with disabilities, and people with mental and physical ill-health. We want to talk about those groups, and we would welcome the opportunity to speak more about changes that could be made.

Shabana Mahmood

You say the DWP is responsive to you—it is listening and willing to listen. What one thing do you feel it could do that would improve the lives of the people you describe, who also represent many of the people I send off to food banks in my constituency? What is the one thing you would be pushing for?

Emma Revie

The one thing we would ask for at the moment is a real, truly universal support system—one that is funded, that people are aware of before Universal Credit rolls out in an area, that local authorities are funded appropriately to set up and that, most importantly, includes debt support and advice.

Chair

So not just money but advice.

Emma Revie

At the moment, it is about digital support and personal budgeting and planning. It was initially considered that debt advice should be part of universal support, but that was discarded as it was seen that it would duplicate services elsewhere. That is not the reality. It is a really important component that does not currently exist within the established universal support offer, which 63% of people coming to food banks have not been offered. The offer needs to include debt, but it also needs to be available. It needs to be resourced and it needs to be available. The fact that people are coming into food banks having not been offered universal support means that targeting and understanding vulnerable people at the point of the initial work coach meeting is not working at the moment. That is before we move into managed migration, where case loads are going to increase—they will quadruple at least. At the moment we are not managing to target and provide the right support to the right people to prevent them from facing having no food. We need to try to fix this before we get to managed migration, when it might be too difficult to pull it back, and that is what we would like to work with the Department on.

Shabana Mahmood

Ms Greenhill and Mr Kirkham, as local authority representatives, do you have the same positive experience of trying to engage with the DWP, or even with the Ministry of Housing, Communities and Local Government, as Ms Revie has described is the experience of the Trussell Trust? Is there slightly more willingness to listen?

Alison Greenhill

I would like to hope so—

Shabana Mahmood

Let’s not look forward at what you hope for. What is the lesson learned from your experience so far?

Alison Greenhill

I think what I said earlier about locally. Certainly locally our DWP colleagues are very engaged in trying to get the right offer and the best offer for residents of the city. My frustration is the national conversation. November’s changes were very welcome in recognising that using simple language—like saying to individuals, “Do you incur housing costs?”—actually make it more simple, and using words like “Do you pay rent?” So those sort of changes happen but I suppose my frustration is Newcastle had full service a lot earlier, yet I don’t see that we have moved on and learned from the experiences—particularly rent arrears and hardship. And also what we have not done, then, is stopped looking at the easy changes, and also we have not looked at where the changes can be discussed, before you do them, with local authorities. So certainly my colleagues who have worked closely with Newcastle, actually, to be prepared for roll-out, have advised me that what happens is a change is made—that we could see what the impact was going to be often on administration, not necessarily on the individual but the work that, then, the local authority faces. I do not think we are learning that lesson, but I am hopeful that this Report means that we can move forward before we go to managed migration, and learn that lesson.

Tony Kirkham

Just to follow on from what Alison was saying, yes, locally we definitely had very positive engagement; unfortunately colleagues locally can listen but they don’t seem to be able to influence the bigger picture. We are represented on one of the working groups. My colleague on that group has had some frustrations. She feels like she is having the same conversation 12 months on, and obviously where Newcastle has been at the front end and has done some of the learning it is a shame that colleagues who have come in further down the line are still having to reiterate some of those processes. Some of the automation processes are still very clunky and are not being prioritised, which means we are doing reworking, and as part of that reworking there are possible errors, and those errors have impacts upon individuals, and that is obviously very difficult for them, and compounds the issues of an already very complex process. So we are more than willing to get involved and help to try to improve these processes, and we do have that engagement locally, but I do not think it is penetrating nationally, would be our view.

Shabana Mahmood

The Department’s position is that some of these complaints are coming from organisations—in particular local authorities have funding issues and are lobbying for changes in terms of the policy rather than trying to make Universal Credit work. How do you respond to that, Mr Kirkham?

Tony Kirkham

We have taken a very proactive role in Newcastle in active inclusion as part of the welfare reform: hence I was able to quote to you that we think the impact of welfare reform—that our share of the £29 billion is over £130 million over the full implementation. We are working with 117 partners locally to make this work. We understand the concepts that sit behind it. What we are having to deal with are the individuals that this is happening to; and these people already have complicated lives. It is not just a small proportion of the population. If you go through the case studies, people have telephone bills. They have various different things. You add up their daily spend and we are getting people who are coming out with £12 a week to feed themselves. That is a very difficult situation and we understand the bigger parameters of it but they are the people we have to deal with.

Luke Graham

Two very short questions, if I can. Ms Revie, thank you very much for your evidence. I know the great work your organisation does. You mentioned the 52% increase in footfall where full services have been for 12 months-plus. Do you have any data that extends out to the 24 months, to see whether it is an actual spike? We see from the NAO Report the proportion of people on Universal Credit that are fairly satisfied is quite consistent with jobseeker’s and some of the legacy benefits. I was wondering if, from the evidence you see, you see that it is a spike, as in it is the transition and migration, then it flattens out afterwards?

Emma Revie

I can speak to the difference between six months and 12 months. At the six-months point we ran a report to see where food banks were in areas where full roll-out had been in place for six months compared to where food banks were in areas where there was no roll-out. At that point it was a 30% increase in footfall, compared to 12% nationally. We then saw it at 52% when we looked at 12 months and more. So it means that it is not the initial period, but we haven’t yet run our data for further on, but we are definitely seeing a trend upwards from six months to 12 months.

Chair

In my area, you can go to a food bank only three times in a year. Is that the same across the country?

Emma Revie

That is a guideline we have. We certainly do not want to be a situation where somebody is being referred to us by a respected referral agency and we are sending them away because—

Chair

We are just trying to gauge how many times someone—

Emma Revie

On average, it is just under two times that you might see somebody visiting a foodbank. When you look at that £1.33 million, that is what it is on average. The reason we have the guideline of three visits is to ensure that—

Chair

We just want to understand the figures.

Luke Graham

I have a question for Mr Kirkham. What percentage of your local population has taken up the direct landlord payment? With the changes to UC, you can now take the payment direct to landlords. Arrears have been raised as a concern, so what has been the percentage uptake?

Tony Kirkham

Within YHN, I think we are at about 25%.

Luke Graham

So a quarter of those who can take it up have taken it up. Are the local teams encouraging that enough?

Tony Kirkham

We are, very much so.

Chair

Are you hitting any resistance when it is encouraged? Obviously it is money in people’s pockets.

Tony Kirkham

I think it is the delay. I suppose the issue is that you wait until somebody is in real trouble before they accept that that is the best way to go whereas some people who have never managed their money before would probably prefer us to be in at the front end.

Chris Evans

How much of your time is taken up dealing with people who have come into one of the food banks just looking for help and advice on universal benefit? When I have been to food banks myself, a lot of people have come in just for advice.

Emma Revie

By the time somebody has been referred to us, it is because they need food. When we have our conversation with them about what has brought them to us, some 28% of people who came to our food banks last year were there because they were on benefits and their money was not sufficient to cover their costs. There are lots of other reasons. About 75% of referrals are benefit-related, with slightly different reasons within that. Across the board, about 75% of people who come to us are there because of something to do with their benefits—so, a lot.

Chris Evans

How does that impact on your finances?

Emma Revie

The way in which we are structured is that each of our food banks is an independent organisation within our collective, so you are talking about local people responding to local need. What does a 52% increase in footfall on average—in some areas it is 80%—do to a small local charity? It puts them under a lot of stress, so we are certainly looking at how we can support our food banks and increase the food they have access to, but also at how we can increase the training and support needed to give that kind of advice about welfare. But it is certainly a strain.

Chris Evans

Ms Corlett, do you have any experience of people who have to sit down with work coaches and talk about their aspirations?

Sophie Corlett

Sorry, who?

Chris Evans

I spoke to the Motor Neurone Disease Association and they said they have members who have to sit down with work coaches and talk about their aspirations. I was just wondering whether you have the same thing happening with some of your members.

Sophie Corlett

Yes, they do have meetings with the work coaches. We can send some information on about that specifically. I think that one of the issues about the meeting with your work coach is that, as we have already heard, the coaches have quite a high case load, which is due to go up. The work coach has discretion in a number of different areas, including in the requirements and conditionalities that are placed on you. For us, a particular issue with Universal Credit is the period between your claim and your work capability assessment, trying to make it possible that while you are waiting for that claim you do not have to do your 30-plus hours of job search. That is a huge barrier for a lot of people who are just not well enough to do it. They are not well enough to go in to see the work coach. They are not well enough to go to the jobcentre. So there are all sorts of discretions that the work coach could have to lift that conditionality, with sick notes, to be in touch with the individual and find out what is going on for them, but we find that that is not being done automatically. The systems that are potentially there at the work coach’s discretion to enable the person to progress through the bureaucracy smoothly are not being put in place. The person then ends up on sanctions and is not able to have a productive conversation.

Chair

There are a couple of points in your evidence that I want you to give a bit more information on. You have an anecdote of someone asking for bi-monthly payments to help them to budget, but the person they spoke to said it would be up to the decision maker. That is a common answer to queries. From what you are saying there, you seem to imply that the person on the frontline in the jobcentre should have more discretion to make that decision for somebody.

Sophie Corlett

I don’t really understand why fortnightly payments shouldn’t be available to everybody. So many people are struggling with this, but people with mental health problems, in particular, are telling us that.

Chair

So that is a recommendation you would make.

Sophie Corlett

We would absolutely make that recommendation for everybody. We have had people being told that they are not eligible. They have got mental health problems and struggle with budgeting, but are not eligible. Some people are told that they have to wait until they have had their universal support session before they are able to get their fortnightly payments. That is akin to saying, “When we’ve given you the training that might make it possible for you to manage it monthly, we will give it to you fortnightly, but while you wait you can have it monthly.” It’s just—

Chair

Topsy-turvy.

Sophie Corlett

Yes.

Chair

Can you explain briefly what you would like to see around explicit consent? You suggest in your evidence that that is problematic.

Sophie Corlett

Yes, it is problematic.

Chair

And the NAO touches on this.

Sophie Corlett

People who struggle with the online journal process or just struggle to come in to see the work coach might need support with a conversation with the work coach. Under the new system, you have to have explicit consent for somebody else to have that conversation, and you have to do that each time. Setting that up might be quite difficult. You might go to see somebody at Mind—

Chair

When you say “each time”, that is the bit I was quite interested in. If I had a mental health problem, I would have to see someone each time—for each intervention—and say, “You have my explicit consent.”

Sophie Corlett

Yes. If you went to Citizens Advice or Mind, you would have to give explicit consent for that person on that day to speak to—

Chair

MPs, for example, have a standard consent form for us to talk to other organisations. That doesn’t cut it in this situation.

Sophie Corlett

I don’t know whether MPs will be exempt in the system.

Chair

I am using MPs as an example. Other organisations have consent forms.

Sophie Corlett

Yes, you have to give explicit consent for them to talk to somebody else. Of course, if you have got a session with your adviser at Citizens Advice, it is unlikely to be long enough for you to get explicit consent, deal with that and then for the person to hold on to the conversation and deal with the issue.

Chair

Sorry, I am unclear. If I went to see Citizens Advice with a mental health problem, and they had a consent form for me to sign, I would have to do that every time and for every intervention.

Sophie Corlett

I’m not sure of the actual process for it. My understanding is that you do it via the journal, but I can get back to you on that.

Chair

Mr Reddaway, the NAO covers this in the Report.

Joshua Reddaway

Paragraph 2.30 sets out the difference between the process for MPs and the processes for everybody else. The documentation I have seen from the Department suggests that a claimant can give explicit consent simply by putting it in their journal. They don’t need to do anything else but, as Sophie Corlett is saying, they have to do that every single time.

Chair

That is the point I was getting at. It is the repetitive bit.

Sophie Corlett

There is an alternative, which is that you set up an appointee, but then that is it. You then have no control over it.

Chair

Okay. So there is a degree of inflexibility there. That is very important.

Gareth Snell

I was just going to pick up the point that you made, Ms Revie, about the increase in footfall to food banks. People have said it is 75% because of benefits, but what breakdown do you have, if indeed you have one, between those who are on in-work benefits and those who are waiting for other forms of benefits—either out-of-work or disability benefits?

Emma Revie

I can give you that data. I don’t have it at my fingertips—I just know the wider groupings—but I can get it for you.

Chair

Just one last question. A number of you mentioned debt advice. The Money Advice Service was set up and is funded by the Government to provide that service. Have you referred people to it? It was supposed to fill the gap that Ms Revie spoke about. Universal support was supposed to include debt advice originally, and it doesn’t. Is the Money Advice Service fit for purpose to do that, or does it need more resourcing? What’s the gap? What’s the issue? Ms Revie, as you mentioned it first, have you had to deal with this?

Emma Revie

We would certainly refer people from food banks to the Money Advice Service in various parts of the country. The difference is that it would be an entitlement under universal support.

Chair

Okay. So you have to queue up for money advice, as with a lot of services?

Emma Revie

Absolutely, and having the investment in to deal with the influx of increase as a result of people coming on to universal.

Chair

I know certain constituents have benefited enormously from it. Ms Corlett, what about from your perspective?

Sophie Corlett

We’ve found the universal support broadly not that useful; maybe it’s just a bit too universal. It’s also very brief.

Chair

What about the Money Advice Service? Have you used that at all?

Sophie Corlett

We refer people to different Money Advice centres, or we give people money advice, and a lot of our local services end up just helping people with their rent, or their debt, or whatever it is. So, it falls back on to the voluntary sector.

Chair

So, from the local authority perspective—I don’t know if either of you or both of you wanted to answer how about that works for you—I guess, Ms Greenhill, you’re at the early stages?

Alison Greenhill

I am. For me, it’s almost too late. Referral often happens when an individual, a household or a family are in debt. So in preparation for full service, we have been trying to identify those households that need it most, because unfortunately I can’t support everybody in the city who may be claiming Universal Credit over the next 12 months. What I can do is target, on the information that I know. There are nearly 800 tenants of our council housing, who we have been working with very actively, to support them in what is an inevitable transition to—

Chair

So you are trying to get in there early—

Alison Greenhill

Yes. For the ones who I know about, and they are particular households that already receive housing benefit, because I know those households; those that aren’t receiving housing benefit, I may not know. So it’s about education and support before someone gets into debt. Unfortunately, I see experiences at the point where there are rent arrears and debt accumulated—

Chair

At which point, it’s very difficult to catch up?

Alison Greenhill

Yes.

Tony Kirkham

We have a mixed economy of support. If you look at it, our active inclusion in Newcastle, which is with the bigger partnership—we’ve got Citizens Advice and we also have our own welfare rights support. Last year, we supported 29,000 residents through that service; just over 4,000, we think, we have been able to support out of homelessness—

Chair

Do you agree with Ms Greenhill about the criticisms she was making about it, when it’s needed?

Tony Kirkham

That’s what I’m saying; we’re trying to be proactive in getting the front end through all those different avenues. The outcomes of this, or one of the outcomes of this, is homelessness, which obviously is one of the things we’re trying to avoid; we have a very good track record in Newcastle of avoiding that. However, as people get into the indebtedness, it is much more difficult to help support them.

Chair

Actually, of course, you’ve got the spare housing, if its “owner” can help a bit.

Tony Kirkham

Being the landlord, we can be more flexible in our landlord duties.

Chair

Not the same in every part of the country. I thank you all very much indeed for coming along and thank you for the written evidence, those of you have written in, because there are a number of points that we will pursue with you after this hearing. You are very welcome to stay for the second half of our sitting. The transcript of this part of the hearing, and indeed of the next part, will be on the website, uncorrected, live in the next couple of days. Examination of witnesses

Witnesses

Neil Couling and Peter Schofield.

Chair

Welcome back to the PAC. We are looking at Universal Credit again; I will not repeat what I said earlier. However, I just wanted to ask you, Mr Schofield, a question. This is Peter Schofield, the permanent secretary at the Department for Work and Pensions, and Neil Couling, who is responsible for the delivery of Universal Credit at the DWP; both are increasingly frequent visitors, certainly in your case Mr Schofield, and Mr Couling has been a number of times before. I just wanted to pick up on something, though. In the last week or so, since 29 June, you have sent me a couple of letters about new data, particularly on satisfaction levels with the DWP, but they are only rather partial information. I wanted to flag up that we do not really like receiving data outside a Report, and certainly not data that only gives a certain very small snapshot of statistics. I wondered what drove you to send me those bits of information randomly, when you knew we were about to have a hearing.

Peter Schofield

It is nice to be here again, Chair.

Chair

I am sure it is.

Peter Schofield

In preparing for the hearing, I was struck in particular by figure 12 of the Report, which looks at the tail of payments. It is based on data from 2017 and it looks at what happens to people if they have not been paid on time, and what happens in the weeks following that. It was based on data from 2017. It struck me that it might be useful and helpful for the Committee, given that I imagined payment timeliness would be an issue you wanted to discuss with me, to let you have the latest data that we had available and that we could assure going back, because we obviously need to have the tail from the period we are looking at. The latest data we had available was the data I sent over, so that is why.

Chair

You agreed the Report with the NAO; it was discussed with you on 6 June and you agreed it and signed it off on 8 June. Then it was laid before the House on 12 June. The data in the Report was as up to date as the Report was ever going to be—you would agree that?

Peter Schofield

The data in the Report that was published was the data—

Chair

You agreed the data was correct. You signed it off.

Peter Schofield

I approved the factual accuracy, as you know, Chair, but we have had more recent data since then in that we have been through quality assurance, which I was able to let you have. As I say, I put it forward on the basis that it might be helpful to the Committee.

Chair

It is a pretty fast turnaround. It was not that long ago that the NAO would produce a Report and it would take a long while before it was signed off, it was agreed that it should be published and it came to the Committee. The Report was signed off by your Department on 8 June, went to the House on 12 June, was published on the 15th and then put in front of this Committee on 9 July. I do not think there is much that is out of date in that Report. There will always be moving data, but I need to make the point that this Committee expects to work on data that is agreed by the Department and not get what is, frankly, rather partial information that has not been analysed for us by the National Audit Office, on 29 June and then again on 4 July. To get two letters, Mr Schofield, is pretty unprecedented, I have to say.

Peter Schofield

The first letter said that I was going to let you have the subsequent data, if you see what I said. It also had some customer complaint data. I only put it forward to help the Committee, and if it is not helpful to the Committee—

Chair

I would say in future, “Please don’t”. Odd bits of data randomly provided, which require further analysis, are not very useful to the Committee. We like to see it in the context. The NAO has done a thorough job over several months looking at it. I was quite struck, though, by the dates of these letters, 29 June and 4 July; they have a remarkable synergy with your Secretary of State appearing before the House of Commons to make some fairly critical comments of the National Audit Office. Can I ask you for the record, Mr Schofield: do you have full confidence in the National Audit Office Report on Universal Credit?

Peter Schofield

You know the situation; I was asked to clear—

Chair

But do you, personally, have confidence in the National Audit Office, Mr Schofield?

Peter Schofield

That is a strange question to ask me. The question was asked, I know—you asked the Secretary of State that very question in the House the other day.

Chair

It is not a strange question to ask. Mr Schofield, you have sent me two letters with what you call up-to-date data, which is out of context and which we need to get analysed, and two rather partial letters, I have to say: not a full Report or anything, just bits of information rather randomly thrown in. I am simply asking you the question, as permanent secretary and accounting officer for the Department for Work and Pensions, whether you have full confidence in the National Audit Office. What I asked the Secretary of State is neither here nor there in this room. I am asking you as the accounting officer.

Peter Schofield

Of course I have confidence in the National Audit Office.

Chair

Good.

Peter Schofield

The key point I am making is that I was asked to clear the Report for factual accuracy. We have a very good relationship with the National Audit Office; thanks to the work of the National Audit Office, we were the first substantial Department, I think, to get our annual report and accounts published this year. That reflects a huge amount of fantastic work.

Chair

So you are now giving a paean of praise for the National Audit Office and your working relationship?

Peter Schofield

We have a very good relationship with the National Audit Office.

Chair

Good.

Peter Schofield

We met again only this morning, and one of the key things we talked about was Motability. There is a lot of good work going on there as well.

Gareth Snell

Mr Schofield, in your letter of 8 June where you said you were content to clear the Report, you asked for two small amendments to be made. Given that you knew you would be producing new data that could impact the content of this Report, why did you not refer to it in your letter when you signed off the Report on 8 June?

Peter Schofield

As I said earlier in my answer to the Chair, it was in preparing for this hearing and looking again at figure 12 that I thought it might be helpful to let the Committee have the latest data on the tail and payment timeliness. It was intended to be helpful to the Committee.

Gareth Snell

I think it was more intended to be helpful to your Minister, but that is a different conversation.

Chair

I will not dig through that, but to be clear, these figures go up and down. I do not think there is enough information yet for a trend. We like to see data and trends in context. Certainly, we do not want to see more of this. You are a fairly new permanent secretary: to make it clear, we like to have an agreed report and work on that basis.

Luke Graham

When Universal Credit was launched, it was welcomed by most of the parties. From my experience of going into jobcentres in Alloa and Perth, on the whole it has been welcomed by those staff. However, as we heard from the previous panel, it has caused hardship for a number of people, especially in the transition to full service. The NAO Report says that “The Department does not accept that Universal Credit has caused hardship”. Reflecting on what you have heard today and some of the statistics, are you now ready to admit that, actually, Universal Credit causes hardship to some claimants?

Peter Schofield

I was glad to be in the Committee to hear the respondents from the previous panel and to hear what has been said. It is reflected in the Report that we published a claimant survey around the time that the Report was being published, which had some of the statistics that you referred to. You ask whether Universal Credit causes hardship. I would make two challenges back to that assertion. First, one of the points that often is made about Universal Credit is the change to the regularity of payments—the fact that we pay on a monthly basis and the period that people are waiting to begin with. Paragraph 2.22 of the Report sets this out very clearly. Not least in response to feedback, we did two things on advances during the course of last year. First, we made it clear to jobcentre staff that they needed to be made available to applicants as they come forward. A chart in the Report sets out the way that that led an increase in the take-up of advances. Obviously, then there was a policy change in the autumn Budget. Secondly, it is interesting to look at Universal Credit in comparison with the benefits that it replaces. It replaces six benefits, some in work and some out of work. As you go in and out of work, you might have to leave one benefit and apply for another one. If you come out of work, you have to reapply. There is friction implied in that whole process. One of the great things about Universal Credit is that once you are in, you have access to the component parts that represent those six benefits that are taken over. If you look at the Report’s reference to the business case, you will see that we assume a greater take-up of a range of benefits because it is much easier for people to claim benefits. Through the combination of the fact that we have addressed the concern about payment timeliness through advances and bringing six benefits into one, we increased take-up. That is referred to in the Report.

Luke Graham

I did say at the beginning that the actual process of Universal Credit had cross-party support—we understand that.

Chair

We are not here to discuss the policy.

Luke Graham

Even from your own survey, which was registered in the NAO Report, what do you say to the four in 10 who are saying they are experiencing financial difficulties as a result of the transition to Universal Credit?

Peter Schofield

With all these, you have to look under the surface and understand what is going on in each case. Some of this point came out in the Report, but some came out in what you heard before: the role of jobcentres’ frontline staff is understanding the particular circumstances of individuals. Before any jobcentre moves out to Universal Credit, there is a lot of work done on the complex needs assessment, where we look at the types of people who might come through on Universal Credit and the sort of support that we might offer. We have a different approach for different people with different circumstances. You then step back and say, “40% of people on Universal Credit say they face financial hardship.” Surveys have been done before on legacy benefits, and in reality—I guess it is a fact—the people who come and receive benefits from the DWP are among the poorest people in our society. The key thing for us is to be able to support people and provide the support that they need.

Neil Couling

I can give the Committee those references if you would like, Chair.

Chair

I will let Mr Graham continue, and then I will come back to you, Mr Couling.

Luke Graham

Again, we understand what the aim of Universal Credit is. We understand the policy and that when people are on it, there is relative satisfaction, but it is that transitioning on. The Report is quite clear: paragraph 2.9 talks about the issues for those people who are already in debt and who have no savings to take them through the assessment period, the difficulties of applying online and the problems with fluctuating payments, where people have different incomes in different months, rather than the four-week or monthly assessment period. Taking that into account, having heard the evidence that you heard before, and with the evidence that is in this Report, surely you must be able to sit there and say, “We recognise that it does cause some hardship to the people who are already in a very vulnerable position.”

Peter Schofield

I go back to the point I made before about Universal Credit and the comparison with other benefits. I am pushing back on your “cause” word, rather than anything else. I do not want to take anything away from the package in figure 8. For each of those points in paragraph 2.9, we are doing things to address them. Take, for example, “difficulties making and managing a claim online, because of a lack of digital access and skills.” As you have heard, and you heard it from the panel before, the assisted digital support is there, exactly to do that. As part of our complex needs plans for each and every jobcentre, and as part of the training that we give to all our staff in the run-up to the roll-out of Universal Credit, we support them in terms of knowing what support to offer customers—

Luke Graham

I appreciate that. We have documented before some of the support you provide to the jobcentres, and I recognise that in the report and in my own experience of the jobcentres. Let me try from a different angle: how do you measure the hardship caused by Universal Credit? How does the DWP measure it? You have the survey that is quoted in the NAO Report, which you are basically dismissing and saying, “They are probably not that well off anyway, so they probably are experiencing financial difficulties.” How do you quantify, or even qualitatively assess, people transitioning from legacy to Universal Credit and see if they are experiencing increased hardship or not?

Chair

Let us not forget that you set as a criteria for Universal Credit that you would see increased satisfaction over time, so there is also a question about when you think that will kick in.

Peter Schofield

I will pass over to Neil in a moment, but to specifically answer your question, Mr Graham, the claimant survey asks people whether they faced any financial difficulties, so the criteria were the way they would answer that particular question. Neil may want to add more, but I would say that for each of our staff, it is about recognising the individual coming through the door and understanding what their needs are, how we can help them, and how a combination of the things in figure 8 help to address the specific needs that they have.

Neil Couling

It is important to keep the legacy system in mind here. There is a bit of a sense that Universal Credit has invented lots of problems. If you look at the “Work and the welfare system” report from 2011-12, 34% of people ran out of money before the end of the week/month most of the time, and a further 33%—so we are up to 67% now—said it happened more often than not or sometimes. That substantiates what the permanent secretary is saying about people on low incomes struggling to manage financially.

Chair

The corollary of what you are saying is that part of the problem is that they are getting too little money. Is that what you are saying, Mr Couling? I am sure that is not what you meant to say.

Neil Couling

What I am saying is that, since Beveridge, actually, the levels of benefit have been set with regard to levels of earnings and to incentivise people to work. To my knowledge, every Government since 1948 has followed that principle. Ultimately, that is a matter for Ministers and Parliament to decide.

Chair

We might come back to that—that is a big assertion about what is happening.

Neil Couling

That just happens to be true, since 1948.

Chair

There has certainly been a cut in the money, which was not the original intention when you took over.

Peter Schofield

It might be helpful to look at figure 18, on page 52. It brings out the point I was making about take-up. You have to look at the second sentence of footnote 6—I am struggling to read it. Buried within the £1.4 billion, “This figure is the net of: the positive impact of claimants taking up their full entitlement to benefit”. There are then some things that net off it the other way, so the number is bigger than that. But it goes back to what Neil and I were saying earlier about comparing Universal Credit with what came before. What came before was more difficult to navigate. With Universal Credit, by making one claim, you get access to the components of the six benefits that—

Luke Graham

I appreciate you bringing our attention to figure 18. The one point is that the outline business case said £2.2 billion, and we have now dropped to £1.4 billion—hey, it’s only £0.8 billion. I wonder what it will be when we come out the other end. The whole point of the NAO Report is that the DWP are finding difficultly quantifying the amount we will save and actually being clear about the number of people they are going to get into work as well.

Peter Schofield

I just need to correct you there, Mr Graham. The number I was talking about is buried within that—there are other numbers as well. Various changes were made to benefit entitlements—policy changes have been made since the outline business case was made. They are all netted away in there. Sorry, I was not making a comment about benefit entitlement; I was making a point about take-up specifically. It is buried in there, and it is a driver of additional benefit, as part of the business case.

Luke Graham

To go back to my original question, how do you measure hardship caused by migration to Universal Credit? We went on to the amounts that people are receiving, but how do you measure it? From a dashboard perspective or management information? How do you measure the hardship caused by UC?

Chair

Do you feel you have a handle on it?

Peter Schofield

Yes. It is reflected, I think, in the part of the Report where we talk about how we keep a handle on people with needs coming through the system, which is paragraph 2.6. So we have got a claimant survey where we ask people that question, but, within that, everyone’s circumstances are different. So we then make sure that we can record the specific types of issues and vulnerability that claimants have as they come in. That enables frontline staff to put some text up against their record so that everyone else dealing with that person knows their situation. Then, the challenge from the National Audit Office, quite understandably, is, “Okay, how are you turning that into management information?” The answer is that you take that text and find clever ways of data mining. So we can pull data out from that and create the management information reports you just described.

Luke Graham

Okay. So that is not being done at the moment.

Peter Schofield

At the moment, we are recording information on individuals. The challenge is, how do we pull that—

Luke Graham

I understand that.

Chair

It sounds like a big new system.

Luke Graham

It sounds fantastic. I am asking you how it is being done at the moment, because in your position you probably do not have the time to go through individual cases. You are pushing back on the NAO, other reports, anecdotal reports from staff, and everything else to say it does not cause hardship to any claimant. How do you measure that to substantiate that counterclaim? I am not hearing how you are measuring that.

Peter Schofield

What the National Audit Office Report says is that we pushed back on that challenge, because we said that advances should be available to clients. That is what we said, and that is what we recorded. In terms of this particular data mining, this is work in hand. We have found it is easier to do for certain situations, like domestic violence, where the text is easier to identify. To give you an example of where it is more difficult, you might have a search for mental health conditions, but a claimant might come in and say, “My vulnerability is that my son has mental health conditions.” It would be more difficult to get that information through a crude data mining. So this is work in progress. But the key thing—I want to get this point across—is that everyone’s circumstances are different. In a sense, what matters is not whether I have got data on hardship, but whether we are providing the right service to clients who come through the door.

Luke Graham

Sorry, just to take issue with you on that, it is kind of crucial that you do have the right kind of data. Otherwise, how can you justify your statement that it does not cause hardship? Look, I am a Conservative Member of Parliament and on the whole I am for—

Chair

You are on the Committee here.

Luke Graham

Exactly, on the Committee. We are looking at trying to see whether we can make this work better. What I am clearly not getting from you is how you measure that hardship. It sounds like you are not getting the information, but that the text mining is in process. Can you give us the target date for when that text mining system will be available?

Peter Schofield

Yes.

Chair

Mr Couling?

Neil Couling

We expect to have completed the first run of the data mining by the end of the summer.

Chair

When you say the first run, is a whole new system being set up? Is there an algorithm that pulls out that information?

Neil Couling

No, we will clearly want to test internally that what we are getting out of it is viable data and so forth. We will run it a few times until we can then run off the system. The Work and Pensions Committee is very interested in domestic violence and the pick-up of cases with a domestic violence characteristic.

Chair

It feels like a bit of a bolt-on afterwards. You designed the system, and you are at a relatively early stage, compared with the total number that will go through. Did you not build in tick boxes or something that would give you quantitative data on some of these individual cases?

Neil Couling

No, we deliberately didn’t, because we know that the system of markers that we currently have in the legacy systems, which we have faithfully produced answers on to Parliament, do not, in many cases, get updated or removed when they should be removed. Vulnerability is often not a permanent state—it is often because of a set of family circumstances and the like—so we always thought that this would be a better system and would give a better way of driving out the kind of information that parliamentarians, researchers and others would like about the characteristics.

Chair

But the text mining depends on people writing the right text in the first place.

Neil Couling

This has been going on since the start of the Universal Credit full service. It relies on the work coaches and the case managers noting the claims right. That has been there from the start. The recent change we have made is to pin that information at the top of the claim—a bit like a pinned tweet, for those who use Twitter—so that it is visible. It is the first thing someone sees, so they may think, “Hang on a minute, this parent has re-partnered. They are not a lone parent, so I need to change that classification on the system.”

Luke Graham

That will record vulnerability, not hardship. I have to point out, because of the terms used in our exchange, that that will record vulnerability, not hardship. Is that right? The text mining is for vulnerability. A vulnerable person naturally experiences hardship. Are you expecting the work coaches to note in the journal that someone is vulnerable, and, through x, y and z, they are experiencing hardship?

Neil Couling

Yes, because things like personal budgeting support, for example, are not just at the start of a claim. If you see during the course of a claim that somebody’s situation is deteriorating, you would want to refer them for some personal budgeting support, or to refer them on for debt advice. The previous panel talked about our not being equipped to provide debt advice, but there are other, more skilled people who are.

Luke Graham

Understood. I want to move on to advances, but so we are clear, the text mining will be ready in late summer?

Neil Couling

Yes.

Luke Graham

Great. The Department stated: “The Department does not accept that Universal Credit has caused hardship among claimants”. That is a statement without substantive data to back it up.

Neil Couling

I think what we are saying is that it should not have, because of the availability of advances.

Luke Graham

So it doesn’t exist at the moment? I just want to be clear, for the record. That is fine. Moving on to the advances, it was mentioned how helpful they are, and I welcome some of the changes that have been brought forward; I know those have helped people in my constituency. However, 40% of claimants are facing financial difficulties, as I raised previously. Is that not indicative that the people applying for Universal Credit cannot really absorb the repayment cost of an advance? An increasing amount of people are taking up these advances, which in some ways is good, because it means that they are getting the help they need. That has gone up to about 60%, according to the Report. However, as the previous panellists mentioned, taking out an advance can mean up to a 40% reduction on someone’s future payments and almost becomes too costly to repay.

Peter Schofield

By referring to the 40% I think you are confusing two different things. The change made in the Budget announcement in November, which was then implemented in January, was to enable people to get the entirety of their expected monthly payment up front, and then to give them 12 months to pay it back. They are getting their money, and early. Indeed, as the Report says, we can pay advances in five days. If necessary, we can pay advances on the day. We have some lovely stories of people coming to the jobcentre who did not realise that we could help them, and they left with money in their bank account from that very meeting. It is a fantastic way of supporting people in need. But it is the money to which they are entitled, and they are getting it early, so obviously they then need to pay it back.

Chair

Money in your bank account is all very well if you have a balance and not an overdraft. You and I probably have a balance—well, maybe you do, but it is not my business to know. But if you are a benefit claimant, and you get money into your bank account, it is just paying off your overdraft. That is not really much help, is it? Your debts could be so much that it would not help you very much.

Peter Schofield

This is a big help. I think many people find it to be a big help for them to come into a jobcentre and get their full entitlement up front.

Gareth Snell

How does that make you any different to a payday loan lender?

Peter Schofield

I do not charge any interest, Mr Snell.

Gareth Snell

But you accrue it back over a period of time in a way over which the person who is borrowing it has no control.

Neil Couling

That is not quite true. We do recoup it over a maximum of 12 months. In case of hardship, we can defer payments for a further three months. Contrast it to work: if you get a job and take out an advance, very often the employer will want it all back—

Gareth Snell

I was not comparing it to work; I was comparing it to a payday loan. I appreciate the fact that you can repay it back over 12 months if there is hardship, but, by your own admission, you don’t accept that Universal Credit causes hardship.

Neil Couling

No, but you can envisage that somebody—we have seen instances of this—might experience another kind of financial shock and that they might need that money to pay for that, rather than pay us back, for the three months that we can defer those repayments to us.

Luke Graham

I understand that some of the changes in advances have been positive, but I will take a different angle. What work is being done to assess whether those people who have taken out the advances, and will have to pay up to 40% in future deductions, are still able to survive on the 60% of their remaining payments for those 12 months in which they are paying back?

Neil Couling

They would have got an extraordinarily large advance plus a very short repayment period to be at 40% repayments off the advance. The average repayment on an advance is about £35 a month, at the moment. For people on low income, that is an amount of money, but it is not eye-wateringly large.

Shabana Mahmood

That is outrageous!

Peter Schofield

The 40% is a cap, and it covers every repayment for everything else that they might be taking forward, including arrears on electricity and such like. It is 40% of the standard allowance. It does not take into account people who might be getting childcare allowance and housing allowance on top of that. So let us put that into—

Luke Graham

I appreciate that. I appreciate the theory side of it. I am more concerned about the data and ensuring that we are really clear. I ask the question again: what work and analysis has been done to give you the confidence to say, “Don’t worry, this deduction cap is well within people’s means. They can carry on with this amount, and they can live at an acceptable level with these deductions.” What is the analysis? Where are the facts?

Peter Schofield

When it comes to advances, someone might be getting an advance, and then have their Universal Credit payment within a matter of a few weeks, to pay it back. Not everyone takes advantage of the full 12-month repayment. Some people choose to repay it more quickly than that. It is a policy change that is intended to address the fact that the regularity of payment on Universal Credit is different to previous benefits.

Luke Graham

I am conscious of time. We briefly mentioned food bank use. One of the previous panellists told us that there was a 52% increase in footfall at food banks in the 12 months after Universal Credit had been introduced. Putting forward the case you have, with advances and what Universal Credit is meant to be doing, why do you think that food bank footfall is increasing in areas where we have full-service Universal Credit?

Peter Schofield

I don’t know. It is a really good question. It is a good challenge from the Report, and conversations we are having with the Trussell Trust to try to understand the complexity of what goes on when someone comes—

Chair

A lot of them are referred by your own staff.

Peter Schofield

They are.

Chair

In my area, I went to visit the day after the Trussell Trust had had to say, “Please don’t just refer people from the DWP,” and the numbers had gone right down. They said, “Sorry it’s a quiet today. It is because we have just asked the DWP to stop people.” So most of the referrals at one point were from the DWP. Don’t you think that that is a sign of a system that is not quite delivering for your own staff, if they are acknowledging that food banks are an essential part of propping people up?

Peter Schofield

Look, I would much rather that we were in a situation where people did not need to go to food banks.

Chair

This is an area where Universal Credit is not the relevant bit; it was about the food bank and the DWP.

Peter Schofield

But I think that that makes the point. It is a very complex situation.

Chair

Do you think that that situation is acceptable for Government employees in a Department that is supposed to be providing social security to people? I don’t blame frontline staff, and I guess that what we are talking about is a safety net in local areas. However, do you not think it is a sign that a system is not quite delivering if people have to be referred to food banks?

Neil Couling

The food banks themselves lobbied Government for a long time, asking for the Department for Work and Pensions to signpost people to food banks. I think it was in 2011 or 2012 that the Government agreed to signpost people to food banks. So it has long been an aim of the food banks themselves for us to refer people to them. It wasn’t something about which we thought, “Ah: that’s what we’d like to do.”

Chair

I suppose that my bigger point, and Mr Graham’s point, is about whether it is good that people are referred to food banks when they are going through a system that is supposed to support them and keep them afloat while they are looking for work.

Peter Schofield

They have access to advances—although I guess there is a danger of circularity in our conversation. I have looked carefully at the data. The chart in figure 16 is an interesting one. I do not think it presents a very straightforward story about what is going on, but we are keen to understand it a bit more. Looking at figure 16, the Hastings food bank is the one that has seen a significant increase in the number of clients since the full service Universal Credit was rolled out in Hastings. Again, however, it is an odd chart, because it shows the level going up, then coming down and then going back up again. The question that I have asked and have tried to find out a bit more about is what was going on in Hastings. In Hastings there is a very good food bank that is associated with one of the local churches. It is doing a huge amount of good work, and there is a good relationship between the jobcentre and the food bank. I said to the jobcentre manager, and to the leaders down there, “What is the nature of the points that are raised?” As far as I know, at no point has the food bank said to the jobcentre that there are issues with Universal Credit that are causing an increase in take-up at the food bank.

Chair

I am sure that the Trussell Trust is listening and will correct us if there are any inaccuracies in that statement. I hope that there are not.

Luke Graham

I have two quick points, and then we will move on. If people have previous arrears with the DWP, am I right in saying that, if they then apply for Universal Credit, they will have that deducted at a 40% rate unless they specifically ask for smaller payments?

Peter Schofield

The maximum can be 40%. We look at the range of—

Luke Graham

Is that automatic, if there are arrears?

Peter Schofield

For example, if it was repaying a fraud, we would absolutely do that.

Luke Graham

Fraud I understand, but could it be any arrears?

Neil Couling

No; some are capped. One of the previous witnesses spoke about this, but the normal amount of housing arrears is 10%, and on exception it can go up to 20% with the personal allowance. There are a complex set of overlapping rules designed to protect claimants from deductions that are too high being taken. As a matter of policy design, we are trying to balance the need to meet social obligations. For example, Ministers were very keen that there was a 40% reduction straight away in the case of a fraud, as the permanent secretary has pointed out.

Luke Graham

Right. As another point of clarification on what you are saying about average repayments, do you expect some of the average repayments to increase in line with some of the November reforms?

Neil Couling

I gave the average repayment with the November reforms in, so that is with the ability to take 100% of your full entitlement as an advance.

Luke Graham

I don’t know whether anyone wants to come in specifically on advances, because I am going to move on to the claimant experience online.

Gareth Snell

Just one point on advances. Mr Schofield, does the increase in advance payments not suggest a problem with the transitional arrangements from legacy benefits previously? Presumably the advance payments are there when there is a problem with transitioning from one to another, or getting access in the first place.

Peter Schofield

Advances are made available to claimants who ask for them. There could be a number of reasons. I think the main thinking behind it was around the changing regularity of payments as you move into Universal Credit—payment monthly—so it helps people to adjust. There have been other changes to transitions. You mentioned some of the transitions from other legacy benefits. Since we made these arrangements, and we saw this increase, we have introduced the housing benefit run-on of two weeks of extra housing benefit. That did not come in until April. The chart that you are presumably referring to, figure 13, runs to February.

Chair

I think anyone would accept that there isn’t any time to analyse the impacts of that at this point. We will be coming back to talk to you about this between the autumn and the new year.

Gareth Snell

You say there are many reasons. When you were putting together the arrangements for transitionary payments, what were you anticipating would be the reasons, potentially, that would require somebody to need the advance payments to the levels that they are currently being taken up?

Peter Schofield

One of them would be the changing timeliness in terms of the regularity of payment. I keep using the word “timeliness”, by which I mean the fact that we pay Universal Credit monthly. That is the point I am making. That would be one of them. The fact is, though, that the policy—

Chair

We know what the policy is; we are looking at how it works.

Gareth Snell

Mr Schofield, you are aware that we cannot go into policy, so that is very nice distraction activity for you, I appreciate that. You can shrug all you like. You have given me one reason; give me a couple of others. What was the thought process behind the planning?

Chair

Mr Couling was there at the time. Mr Couling, you carry on.

Neil Couling

We know that roughly half the population have less than £200 worth of savings, so we knew that a bunch of people would need help bridging from their old benefits to the new, or that they may come out of work, having been weekly paid in work, and will be monthly paid in our system. We estimated in the outline business case that this would be 49% of cases. The report does not mention the figures, but para 2.8 does mention this. We thought it would be 49%; in fact, it was around 60%. That came after some policy interventions. I am not saying that as a distraction, but Citizens Advice came to us and said—this is a good example of feedback actually—“We don’t think you’re routinely advertising advances enough.” You can see in the figure in the chart the effects of just our putting a change into our operational processes. We knew that a number of people had, or would have, very limited resources, either coming from legacy benefits on to Universal Credit, or coming from employment, by being made unemployed, on to Universal Credit. There will be others as well, such as those who have had a relationship break down. You might not have access to any of the resources if you have fled a domestically violent circumstance, or things like that. The advances were there as a safety net for that experience, and they were expanded after the autumn Budget.

Shabana Mahmood

Mr Couling, with respect, it does not take genius-level intellect to work out that people living life on the very edge of survival are not going to have savings. Why did you and your Department, for whom serving the poorest and most vulnerable is bread-and-butter work, not know that, and understand its full extent, at the very beginning of this process?

Neil Couling

Advances have been in the system since the very start in 2013. In fact, they were part of some policy reforms that I led in 2008, when we moved people from being paid benefits weekly to being paid on a two-weekly basis.

Shabana Mahmood

We’re talking about the level—or lack thereof—of savings.

Neil Couling

Hold on a second. I look back to the experience of that change, and in that example, although I appreciate that the change was only from one weeks to two weeks, very few people—I think around 20%—took out an advance on that basis. We therefore made the assumption that it would be 49%, which was an undershoot. It was actually 60%. Personally, I am not too worried about the level of advances. I want people to get the help that they need to transition safely on to Universal Credit. However, I think it is wrong to say that this somehow crept up on us. It is quite the opposite; it was there from the start. There was a policy decision about the level of advances, and that is the basis on which we entered into 2013 and rolling the policy out. You know that, in the Budget, the policy position was changed, and we moved from 50% advances to 100% advances.

Chair

We recognise that policy changes happen, but the point is that, if you had a better idea at the beginning about the number of likely advances, that might have impacted on the policy decisions.

Neil Couling

Until about September 2007, the advances were running at about 40%, so you could say that I overestimated for the first part of this.

Chair

Sorry—2007 or 2017?

Neil Couling

In 2017, advances were running at about 40%. It is the intervention in our jobcentres that that was—

Chair

But isn’t that also because you were dealing with the simpler cases first? It is easier for single people to eke out an existence just for themselves.

Neil Couling

No, that was consistent across the full service as well as the live service.

Peter Schofield

It comes out very clearly in the Report, actually. Paragraph 2.22 shows the action that happened. It is a good example of responding to feedback from stakeholders, as the paragraph sets out. However, we changed the guidance in October, and figure 13 shows that advances almost immediately went up. It is very much linked to the change in guidelines that we gave to make it routinely available, which was in response to feedback from Citizens Advice and others.

Luke Graham

How much did it cost to drop the waiting period?

Peter Schofield

It was £140 million each year for the seven days.

Luke Graham

And how much would it be to eliminate the waiting period altogether? People go in and have to wait for the four-week assessment period, meaning that they need an advance. How much would it be to eliminate that altogether?

Peter Schofield

There is a very good table in here—which I probably won’t be able to find at speed, but it shows the whole process, including the seven days of waiting that was then removed. The seven days of waiting was a policy introduced into Universal Credit—

Chair

Figure 9 on page 34.

Peter Schofield

That bit you can basically take out of the process. Look at everything on page 35. I think that is the bit that you are talking about, Mr Graham. You then have the four-week assessment period, which is baked into the whole design of Universal Credit, because we pay on a monthly basis; you have to wait to see what earnings the claimant has received over the month before you know what their entitlement is. There is then a week for payment, because when you take into account how long it takes to run the BAC’s system, and that there are weeks with double bank holidays and things, you actually need that week to give people certainty about exactly what date in the month they will get paid. So, we could remove the seven-day wait because it was a policy introduction, and it was either in or out. Everything else is intrinsic to Universal Credit.

Luke Graham

So there was never an analysis on bringing down the four-week assessment period to a two-week period, with the pay slip from the previous month being used?

Neil Couling

Your problem is that, in policy design—I don’t want to annoy the Chair too much by talking about policy—

Chair

It’s a bit about policy and a bit about practicality. They really do come together. The right advice to a Minister would hopefully lead to good policy.

Neil Couling

Yes, and I think we have good policy here, but that may be because I am the one who gave this advice.

Chair

I record for the record the eye-rolling of the permanent secretary.

Peter Schofield

It was a supportive eye-rolling. You will see that on the video afterwards.

Neil Couling

If you want a system that is sensitive to earnings received in the period in which they are received, it has to pay in arrears, and you have to have it as a month. You cannot reduce it from a month, because 57% of people on tax credits—that is what we modelled all this on—are paid monthly. A further 12% are paid four weekly. This figure is quite low and might surprise people: 3% are paid fortnightly. And the remaining 28% are paid weekly. If you have any other payment period—if we went weekly or two weekly, as many of the organisations lobbying us have been lobbying us to do for at least 18 months—you can’t make the system work. You can make a monthly system work for everybody, but you can’t make a weekly system work for the monthly paid. Why is that? I would be paying you full Universal Credit for four weeks out of five, because you wouldn’t be receiving any earnings in that period—well, in four weekly periods—and then I would be paying you no Universal Credit. So you have to have a monthly assessment and the money has to be paid in arrears.

Luke Graham

It was noted in the Report that just over half the claimants make their claim online without help. Obviously, there was the Verify target of 90%. Is that still realistic?

Neil Couling

No, a Verify target of 90% isn’t realistic at all, and I have scaled that back in terms of our assumptions. You understand that Verify is not a system that is under our control; it is run by the Cabinet Office, and providers run that system so that the data is secure from Government, so we can’t pry in and see what’s going on there. So we have scaled that back. When we did our initial piece of work, we thought that the credentials that people on benefits tended to have might get us towards 80%, but the actual practice, the experience so far, is that it’s around 40%. In some locations, we’ve got it a little bit higher than 40%, but 40% is the planning assumption I have set for the next couple of years inside the programme, and I have resourced the jobcentres so that they can cope with doing the identity checks in the offices so that claimants do not suffer because of that.