Why on earth is stopping Labour from saying the Universal Credit won’t work?
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RedditThis afternoon the Secretary of State is up before the Work & Pensions Select Committee for a chat about universal credit. So I thought I’d write you a column about universal credit and why, like so many of the government’s ideas on welfare reform, it’s as unworkable as it is punitive. Unfortunately, while browsing Hansard, I came across this phrase, from a contribution by Tory MP Richard Graham to last Tuesday’s Opposition Day debate on the subject -
“[Universal credit] will…reduce 30 complex benefits into something that even the humblest citizens advice bureau can understand and explain to the many constituents of ours who visit them…”
- and now I’m too angry to write a column. Seventy-plus organisations – the kind of groups who were providing a Big Society for decades before Cameron decided to dress the concept up in bunting and Cath Kidston: like the ‘humble’ Citizens Advice, who, unlike your average Tory or indeed most MPs of any colour, actually know what they’re talking about when it comes to the welfare system – are frantically pointing out that this benefit overhaul will see the poorest and most vulnerable lose out. It’s not bad enough that the Tories won’t listen to them – they have to talk down to them as well.
So, instead of spending 1000 words poking holes in universal credit and making cat jokes, I give you the excellent words of Willie Bain MP, also from Tuesday’s Opposition Day debate, because this is an effective if not exhaustive summary that you might have already have read:
In principle, simplifying the tax and in-work benefits system by uniting them in a single integrated payment may have beneficial effects, but there is evidence that the government are failing to address potential weaknesses in several key areas.
First, the system becomes more complicated for the growing number of self-employed people, and depends on access to the internet. In my constituency, where the poverty level is drastically above the national average, more than eight in 10 people do not have access to the internet at home.
Secondly, the current design of universal credit appears to penalise lone parents. Gingerbread understands that up to 4 million of them, including 1 million who are in work, will lose out under universal credit. Estimates suggest that 150,000 of the poorest single parents could lose up to £68 per week, which would push 250,000 children deeper into poverty. The situation appears worse when we consider the increasing competition for part-time work in a weak labour market. The rate of under-employment among women aged between 16 and 24 has risen by nearly 5% in the last four years, and for women aged between 35 and 49 the figure is nearly 4%.
Thirdly, universal credit does not put right the harm that the Government have already done in regard to support for child care costs. According to Save the Children, 56% of mums say that the main issue preventing them from working, or making them consider giving up work, is the increase in child care costs. However, parents on low incomes are already paying more than they used to because of the 10% reduction in the child care tax credit. The Resolution Foundation found that last year child care costs rose by 50% for some of those families.
Fourthly, the much-trumpeted rise in the personal tax allowance will be counteracted by universal credit, because people on low incomes who receive the credit will no longer receive a reduction in their tax bills. A £1,000 increase in the personal tax allowance will give £200 per year to every basic rate taxpayer except those on universal credit, who will gain only £70. They will receive only a third as much from any increase in the personal tax allowance as the rest of the population.
Fifthly, there is a risk that the withdrawal of “passported” benefits such as free school meals, and the lack of a second-earner disregard in the design of the credit, will create new cliff edges in the benefits system.
Finally, those who take jobs after being unemployed for more than six months will not receive an extra four weeks on benefits to smooth their transition.
As the litany of problems with this credit grows longer, Labour’s insistence that we want to see this policy succeeding seems increasingly silly – a little like Nicola Murray in Saturday’s TTOI, firmly insisting that her Opposition party supported scrapping ring-fenced funding for school breakfast clubs even as the Government realised the policy made them look like callous, shameless, unfeeling bastards robbing from children and the working poor.
Yes, you should be better off in work than in benefits – that’s an argument for affordable transport, affordable childcare, healthy trade unions and a living wage (and I’m delighted, not incidentally, that the Manchester Minimum Wage will be going up again from next month). But do we need to keep saying we support the principle of simplifying the entire tax and in-work benefits system into one integrated payment? I support the principle of free bourbon biscuits for all, in that I think it’s a nice idea, but I also accept that a) if it was possible, it would probably have happened by now and b) there are higher priorities in the fight to end child poverty.
The experts know universal credit won’t work. The government’s own advisers know it. The Prime Minister knows it, which is why he tried to sack the Quiet Batperson from the DWP brief. What on earth is preventing Labour from coming out and saying that we know it too?
