Labour is committed to developing a complete replacement for Universal Credit. We believe this to be essential to meeting our objectives of ending child poverty in the UK. This is a huge mission – and only one of several major policy challenges the shadow work and pensions team is working on – that will develop a modern social security system that offers real support to everyone.
Earlier this month, myself and shadow employment minister Seema Malhotra hosted a roundtable for around 80 members as part of Labour’s national policy forum process, which sparked excellent debate and delivered new ideas. A few days later, I did an event with over 250 members of affiliated trade unions on the future of social security hosted by the Trade Union and Labour Party Liaison Organisation (TULO). And we’ll do as many events as there is demand for because we need the active democratic involvement of our members and unions.
That’s why today, we are specifically asking people to submit their views on the future of UC to the national policy forum’s work, pensions and equality commission. I am keen to hear whether people believe we should continue with a single combined benefit covering both in-work and out-of-work support. Having seen the process by which people have been transferred onto UC, I am conscious that any reform must be done in a way that minimises the impact to claimants. So I ask: what is the right way to do this?
Then we must consider what a replacement for UC should be. During the current pandemic crisis, we have asked the government to end the five-week wait, the benefit cap and the two-child limit. Needless to say, the crisis has exposed the government’s arguments, which potentially leads us to the direction of constructing something that works.
In terms of how a replacement should work in practice – fundamentally we seek a completely new approach, putting respect and support at its heart. Wouldn’t it be positive if claimants themselves had the say over how frequently they are paid; whether their rent is paid directly to the landlord; and if we had a system more responsive to changes in personal circumstances. The system must also work for those who are self-employed. The current ‘minimum income floor’ regulations can leave people destitute and undermine potentially viable businesses.
Another issue that is often overlooked: how should a replacement for UC interact with other parts of the social security system? Most people currently eligible for UC, because they are out of work, are also eligible for National Insurance-based benefits like Jobseeker’s Allowance and the Employment and Support Allowance, but there is usually no point in claiming both as your UC claim would simply be reduced by a corresponding amount. At a minimum, these benefits need to be raised to match the increase in UC. Going forward, we must acknowledge that they are still a significant part of the existing system, with an extra 250,000 claims for JSA up until the end of April alone. How the alternative to UC interacts with these benefits, and others like Carer’s Allowance, is also an important question.
A replacement for UC must work for everyone. Our social security system should help disabled people with the challenges they face. But the Tories have cut this to woefully inadequate levels, and there is no equivalent of the enhanced disability premium or severe disability premium in UC. That means disabled people not in paid employment and living without a formal carer can potentially lose out significantly if transferred onto UC. While the government have been forced to address this, this is clearly a major flaw of the benefit that needs resolve.
Finally, we need to think beyond the existing scope of UC. The Covid crisis has given us our first experience of a Scandinavian-style wage replacement policy in the form of the furlough scheme, working alongside a universal provision. What can we learn from this? We also know that council tax benefit and council tax arrears are major causes of debt and distress. If rent payments can be contained in one combined benefit – why can’t council tax support? And on rent, we must never again allow a government to erode the real value of rent support to the point that it becomes dangerously low. How can we build that safeguard into any future system? These are not easy questions, but they are essential ones to ask, and the ones Labour is examining closely.