Mark Whitehead 10 January 2018

What is the future for Universal Credit?

What is the future for Universal Credit? image

The idea of Universal Credit (UC) is simple enough - indeed, simplicity is the whole point of the new benefits system announced by the then Conservative work and pensions secretary Iain Duncan Smith in 2010.

It brings together a range of social security benefits into one unified payment, to reduce the phenomenal complexity of the old regime, cut bureaucracy and make payments more transparent for claimants.

It is aimed at the unemployed and workers on low pay and promoted by the government as a simpler, fairer way of encouraging people back into the world of work.

UC was enshrined in the Welfare Reform Act 2012 under the Conservative-Liberal Democrat coalition, while its detailed workings were delegated to regulations in secondary legislation, replacing six means-tested benefits and tax credits: jobseeker's allowance, housing benefit, working tax credit, child tax credit, employment and support allowance and income support.

Initially, the announcement made clear that local authorities, responsible for administering payment of Housing Benefit, one of the existing benefits to be incorporated into the scheme, would have no significant part in delivering the new system - though the government subsequently recognised there may be a useful role for councils in helping people access services.

The controversial system was launched in trials in a limited number of areas and is gradually being extended - though amid hold-ups and a torrent of protest over its effects, full roll-out will not be completed until 2022.

Problems began when trials were launched and implementation quickly turned out to be far from simple, to the point where a leading Lib Dem declared: 'Universal credit is no longer a progressive, reliable policy. It is a complete train wreck.'

The list of criticisms is a long one. The most persistent was over the six-week waiting period imposed on claimants before their first payment in an attempt to mimic the world of work - now altered after horror stories of people being left with no money for days or weeks on end.

Other criticisms have revolved around the IT systems and the way the whole project has been managed. There have been delays as implementation costs, initially estimated at about £2bn, were raised to more than £12bn.

Adding insult to injury - as some would see it - in 2015 the Government announced big cuts in the total value of UC, expected to save £5.5bn a year by reducing the working income allowance and removing the family element and first child premium, and limiting the per-child element to the first two children.

Nevertheless, the Government has responded to pressure - abolishing a 55-pence-a-minute charge for enquiries from claimants after massive negative publicity, reversing the previous cuts and increasing the amounts paid to the least well-off.

And despite demands for changes in its implementation and hostility towards the government's handling of the project, UC retains the support in principle of the main political parties who are not calling for its abolition but for a delay in the roll-out while problems are fixed.

So with dogged determination it seems the new system will slowly but surely continue to replace the old benefits regime - though with such a fundamental reform affecting so many vulnerable people, we can expect more highly-politicised bumps along the way.

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