“A profound mistake” – Reynolds’ speech on cutting Universal Credit

Below is the speech made by Shadow Work and Pensions Secretary Jonathan Reynolds in the debate on Universal Credit and Working Tax Credits today.

I stand here today to move the motion on the order paper in my name and those of my Hon. Friends, opposing the reduction in Universal Credit and Working Tax Credit that is set to take place in April of this year. In doing so, I am not here today to claim that Conservative MPs are heartless, or lack compassion, or have insufficient regard for the poorest people in this country. I know that after the vote on free school meals, many Conservative MPs received a high degree of personal abuse, and I want to make clear that that is wrong. But I am here to put forward a clear, and I believe compelling, case that reducing Universal Credit and Working Tax Credit this April, would be fundamentally the wrong decision. It would be a profound mistake – for families, for the economy, and for our ability to effectively tackle and recover from the Covid pandemic.

Before I do so, there has been a suggestion from the Prime Minister that parliament is somehow not the right place to have this discussion. Opposition days have been a feature of our parliamentary system for many decades now. They’ve been used by the Conservative Party when in opposition very successfully, such as when the Labour government was defeated over resettlement rights for the Gurkhas in 2009. So, I put it to all members, that parliament is exactly the right place to have a discussion of such consequence to the country, and the government cannot expect, to fight a campaign for parliamentary sovereignty one week, and then run away from parliamentary scrutiny the next.

Let me also say at the outset, Mr Speaker, that throughout the pandemic the opposition has always sought to be constructive. As the official opposition, we want the national strategy to succeed. In that spirit, we welcomed the changes that the government made to Universal Credit at the beginning of this crisis. The £20 weekly increase and the suspension of conditionality and the Minimum Income Floor, were necessary steps to support people. Recognition must also go to frontline DWP staff who kept our social security system going through the early stages of the crisis, making sure that hundreds of thousands of new claimants received the support they needed. All of those staff deserve our praise – from the civil servants working in the Department to the security guards I met with recently, who face very difficult working conditions keeping Jobcentre Pluses open.

But the fact that such urgent changes were required, just to provide a basic safety net, is a telling assessment of the social security system that we had going into the crisis. If we cannot properly support people in a time of need without emergency surgery to the system, then it is not fit for purpose. And it is a fact, that levels of support for people in this country when they lose their jobs or can’t work, are significantly lower than in comparable European countries. Today, I am going to address three points – how we got here, the case for reversing this cut to secure our economy and finally, and the human impact if the government refuse to change course.

Firstly, Mr Speaker, we must be honest about the state of our social security system going into this crisis. Since 2010, poverty has increased significantly in the UK. In addition, people who already were in poverty in 2010, are now so much deeper in poverty than they were. This is not an argument about definitions. Conservatives themselves were driving influences behind things like the Social Metrics Commission, which came up with a new definition of poverty very similar to what has always been traditionally used. The government’s own estimate is that 4.2 million children live in poverty. That is shameful, it is wrong, and its unnecessary.

The UK, along with Ireland, is an outlier compared to the rest of Europe, when it comes to inequality. And it means the reality for millions of families, is that they went into this crisis already under significant pressure. As the Resolution Foundation said in 2019, the meagre increase of 1.7% to Universal Credit that year was the first working-age benefit increase for five years. It means that last year the real value of basic out-of-work support was lower than it was when John Major was Prime Minister. So, anyone claiming that the system is too generous, or trying to resurrect the stigmatising rhetoric of George Osborne, simply has no case to make. Therefore if, this cut goes ahead, it will leave unemployment support at its lowest level ever, relative to average earnings.

This isn’t just morally unjustifiable. It is economically incompetent. Cutting unemployment support in the middle of a recession is always the wrong choice. Which is why no government has done so, since the Great Depression. If the government is serious about economic recovery, cutting Universal Credit is like pulling the rug from under the economy’s feet. This £20 a week is not saved by families. It is spent. It is spent in shops and businesses across the country, stimulating the economy. No one can reasonably argue that the pandemic and the unemployment crisis will be over by April this year. And whatever protestations we hear, and however frankly people vote today, I know there are plenty on the benches opposite who agree with this case.

The former Secretary of State for Work and Pensions, the Member for Preseli Pembrokeshire, recently said this: “Withdrawing the uplift would reduce the spending power of people on the lowest incomes. This will likely reduce consumption, meaning families going without essentials and household debts rising. It would also see a reduction in spending just when the economy needs it most.” I couldn’t agree more. I also think he’s right to talk about levels of personal debt. Because as well as the real value of benefits being historically low as we went into this crisis, the pandemic has meant very real additional costs for most families.

There are more meals to cook at home, more days to heat your house, having devices and lights on at times you wouldn’t normally and buying what you need to teach your kids at home. The clinically vulnerable have been forced to buy food locally at higher cost than it would cost in big supermarkets. Everyone has experienced the pandemic differently, and for some, these costs have piled on. Citizens Advice told me this week that three quarters of the people they help with debt who currently receive Universal Credit and Working Tax Credit would have a negative budget if the £20 were cut. That means they’ll have less money coming in than they do going out. They won’t be able to cover basic essentials, such as food or heating. At a time, when one in three households have lost income because of Covid and 7.3 million people are behind on their bills.

Mr Speaker, the proposed cut to Universal Credit and Working Tax Credit isn’t the only issue causing consternation in the country right now. In particular, I want to highlight the continuing injustice of those people on ESA and Jobseeker’s Allowance, who did even get the uplift to begin with. I find this unjustifiable, and discriminatory, and I would ask the Minister to specifically reference this point in the government’s frontbench speeches. But reversing the April cut to Universal Credit, is a specific, clear and unavoidable decision that needs to be taken, and that is why it is right to be bringing it to parliament today.

Some of the speeches we will hear today, will no doubt say we should focus on jobs, and getting people back to work, not on social security. The Prime Minister said something on these lines at the liaison committee. But members will know Universal Credit is an in-work as well as an out-of-work benefit. So this argument doesn’t work at all. To be frank, it would be helpful if someone told the Prime Minister this. Universal Credit is also means tested, so if people go back to work and don’t qualify for it, they won’t receive it at all. If we want to have a serious discussion talk about boosting employment and making work pay, let’s discuss work allowances, and the taper rate, and deductions – but let’s not try and use that to excuse the government doing the wrong thing on the cut.

Others may say, support should be more targeted. That the basic allowance is the wrong element to target. Well in that case, the government would logically scrap the two child limit, or the benefit cap, which disproportionately affect people in the most difficulty, which are larger families in areas with higher housing costs. But when we put that forward, it was rejected.

Finally, Mr Speaker, there has been a proposal for a one-off payment to compensate people affected by this cut. This is an awful idea. It doesn’t address the real terms reduction in support just as unemployment is expected to peak, but more than that, whilst 6m families are affected by this, that cohort will change in composition throughout the year. A one-off payment, based on who is eligible now, will fail to support some of the people who will need help the most. Please think again.

I know it upsets Conservative members that we are still determined to replace Universal Credit altogether. But I would say to Conservative colleagues, if you won’t listen to us, read the work of the cross-party Work and Pensions select committee. Read the report of the cross party House of Lords Economic Affairs Committee, chaired by Lord Forsyth, which are clear and robust in their highlighting of the fundamental problems that currently exist. The five-week wait, the two child limit, the erratic assessment period, the problems with paying for childcare in arrears, the shocking design which means the majority of disabled people are worse off on Universal Credit. The last one of those, is incredibly personal to me. And it simply isn’t right to not replicate how Severe Disability Premium worked under the previous arrangements.

If everything was working as well as ministers say, would we really be a country where foodbanks have gone from being a niche form of support, mainly for those without recourse to public funds, to a mainstream and essential method of keeping people fed? Would we have had the fundamental increase in child poverty, which is getting bigger with every year of Conservative government? These are questions that deserve answers.

Throughout this crisis, the government has too often been behind the curve – never out in front, and they’ve left some decisions, such as on furlough extension, to the very last minute in a reckless game of brinkmanship. That is heavily why we tragically have the highest death toll in Europe and the biggest economic downturn of any major economy. Let’s not repeat that with this decision. We all know, families are looking at us, wondering what we will do to help make getting through this crisis that little bit easier. What they don’t expect, is the government making it even harder.

I would hope that the one thing we can all agree on is that the crisis has shone a spotlight on some of our problems in the UK, problems that have made tackling the pandemic harder, and provoking a discussion about what kind of society we want to rebuild when the pandemic is over. If it is really the ambition of the Conservatives to level up the UK, it is hard to see how they can support a cut which would be so regressive for low income families, and which disproportionately effects the places the government say they want to help.

Families like Bethany and her child in Blackpool, who says: “I was made redundant due to Coronavirus. As a single parent to a one year old, Universal Credit is now the only income I now receive. If the Conservative government does cut £20 a week, I will become one of the statistics needing to use a food bank. It devastates me to think that I will not be able to provide for my child, should this decision be finalised.”

Or Margaret, who has been volunteering at a foodbank in Luton: “A young man came in for a food parcel. He looked thin and his face was grey. He sat down and he said he had thought he could last with no food until his Universal credit came through but he found he couldn’t. He came on a Wednesday and his Universal Credit was due on the Friday.” This is the reality, before this cut has gone ahead.

My inbox is full of personal accounts like these. I’d urge every member on the benches opposite to go and look at their inbox and read the human cost of what it will be like for people if this cut goes ahead. Address the worries people have about not being able to put food on the table. Think long and hard about the uncertainty and fear low income families face, after nearly 10 long, hard months of this pandemic.

I want to make a special appeal to the new MPs on the benches opposite. Whose constituents elected them in good faith for the very first time in 2019. Many of those people are the first Conservative to ever be elected to those places. They’ve already made history. Their success was a significant personal achievement. They’ll be remembered. But so will their votes. Most of all, when thinking about how to cast a vote today I urge everyone to take a moment to reflect on what this cut will mean to the people that send us here. The uncertainty is will add, in an already uncertain time. The loss it will bring, when we have already lost so much. The fear it will cause, when what people need it hope. For our constituents, for the British economy and for the national interest, we need to cancel this cut. And I ask every member of this House to support our motion to do so today. Thank you Mr Speaker.