THE firebrand SNP MP, Mhairi Black, has made a name for herself condemning the UK Government's benefit reforms. So it came as some surprise last week when she began her speech in the Universal Credit debate by praising it. She said that replacing the cumbersome system of multiple benefits – jobseeker's allowance, housing benefit, working tax credit, child tax credit and income support – was a good thing. “We're not calling for it [Universal Credit] to be scrapped, just halted”. I'm not sure that I agree with her.
The Government's welfare reform has created an apparently humane system that conceals an inhumane objective. Universal Credit (UC), which is being rolled out across the UK over the next five years, is ostensibly about making work pay and making it easier to access benefits. It is really about disguising benefit reduction and forcing people into taking whatever work is available. It is essentially coercion and cuts disguised as efficiency and fairness.
That proliferation of benefits happened for a reason: people's circumstances are often very different, and sometimes need to be addressed individually. One catch-all payment, even without the cuts in benefits that are going on in the background with UC, could never provide the flexibility necessary to keep people from falling through the net. Many will recall the chaos over the Child Support Agency (CSA), which was supposed to simplify child maintenance and had to be scrapped. Universal Credit is beginning to look like the CSA on steroids.
First of all, claimants must have a phone, a bank account and access to a computer, which is by no means universal as anyone who saw I, Daniel Blake will appreciate. But even assuming everyone gets online soon, the system is fraught with difficulty. In most cases, claimants have to wait six weeks before they get their first payment, which forces many into debt. They have to borrow money to survive, often at loan shark interest rates.
The Government claims the delay actually helps claimants manage the transition to work. In a job, people get paid monthly in arrears, so were they to get their benefit paid upfront, they would have an equally long wait for money when they start work again. But the situation of someone who is actually in employment is very different to that of someone who has fallen out of work and is in benefit arrears. The latter are very likely to be evicted for non-payment of rent for a start. According to a poll by the National Landlords Association, only two in 10 private landlords say they are prepared to accept UC tenants in future.
The real purpose of the six-week black hole was to make Universal Credit a very last resort. If you are offered a dead-end, zero-hours job on or below the national living wage (like five million in the UK), you might well consider that life is better on benefits. The six-week wait is designed to make you think twice. Food banks will likely be your only source of comfort as you find yourself on the streets. Most unemployed people have zero savings, and if you have children, six weeks without cash is unthinkable.
However, I suspect the Government will eventually give some ground on the six-week wait, as it did over the 55p a minute charge for using the UC claims phone service. Its manifest unfairness is too much for most Tory backbenchers, who could not bring themselves to vote against Labour’s call for UC to be paused in last week’s debate. They abstained en masse. If and when the six-week gap is closed, both Labour and the SNP may be in the uncomfortable position of having endorsed the principle of Universal Credit by default.
Conservatives have learned the lesson of previous benefit reforms. They create highly-charged political reactions, as George Osborne discovered when he tried to phase out tax credits in 2015. Better to use a softly softly approach and make tactical concessions in order to preserve the strategic objective. Universal Credit is the leading edge of austerity and it is using a version of confusion marketing to ease through very substantial benefit cuts. For example, Employment and Support Allowances for people with only a limited capacity for work will be greatly reduced under UC, but not immediately. New Universal Credit claimants under the age of 22 will find their housing benefit is cut. Working families are in for a shock come 2020 as they discover that UC does not nearly match the overall value of the old benefits.
When George Osborne reversed the phasing out of working tax credits he did not scrap the substantial cuts that are baked in to Universal Credit. According to the Institute for Fiscal Studies, three million working families with children on tax credits will find themselves £2,500 worse off under UC by 2020. The working-age benefits covered by Universal Credit are being frozen for four years, to achieve cost savings of around £12bn. Not only is UC less generous in itself, inflation is eroding all working-age benefits by 3 per cent a year.
All this is disguised by a system of Byzantine complexity. Few people even in the Department of Work and Pensions seem to understand the new system, which appears in a state of constant crisis. In areas, like Inverness, where UC is being introduced in Scotland, almost half the cases investigated by Citizens Advice were found to involve administrative errors and delays – often leading to heart-rending stories of personal distress. But in almost every case the initial response from the DWP had been along the lines of “computer says no”.
The Scottish Government has promised to introduce a fairer system of Universal Credit, allowing it to be paid fortnightly and with direct payments of housing benefit to landlords. But there are multiple problems here, not least that housing benefit is being scrapped in the new UC benefit. Welfare is only partially devolved so ministers have no say on how the overall system works or is financed. Nicola Sturgeon will come under pressure to restore the headline cuts in benefits, as in 2015 when opposition parties urged her to reverse Osborne's cuts to tax credits. Then, she wisely stood her ground and waited for a U-turn. But now, with the establishment of the new Scottish Social Security Agency, the Scottish Government has placed itself in the front line of UK welfare cuts over which it has no control and which it cannot afford to reverse.
The old system of multiple benefits and confiscatory cut-offs was certainly not perfect. The principle of allowing claimants to keep some of their benefits as they enter work is a sound one, but this is not what Universal Credit is about. It is first of all a vehicle for cutting benefits by stealth and thereafter punishing claimants for failure to find work. The only positive might be that it has indirectly sparked the debate over Universal Citizens Income. The Scottish Government is investigating the proposal to scrap the costly benefits bureaucracy altogether, and give everyone a basic income irrespective of need. However, Universal Credit shows the danger of proposing apparently simple solutions to complex problems. One size rarely fits all, and welfare will always have to be tailored to need.
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