The implementation problems are severe. On Wednesday, Hammond must reaffirm the government's commitment to a fair benefits systemby Josephine Tucker / March 7, 2017 / Leave a comment
The rollout of universal credit, hailed by its chief architect Iain Duncan Smith as “the biggest change since Beveridge introduced the welfare system” and dogged by delays and IT problems, is now finally gathering pace. But alarms about its shortcomings are getting louder, too. The Budget on Wednesday provides the government with a chance to address these head-on.
The core idea behind Universal Credit was to replace a web of different payment systems, overseen by different agencies, with a single monthly means-tested benefit. This would be simpler for claimants, who would no longer have to make new claims if they moved into or out of work, and would eliminate the complicated set of thresholds and withdrawal rates which had left some people facing cliff-edges in support and poor work incentives. Universal credit payments are based on real-time earnings information, and thus supposed to be responsive to the fluid realities of people’s lives.
The other big selling point of universal credit was its promise to lift 900,000 people—including 350,000 children—out of poverty. This promise has, however, been shattered by a series of heavy cuts to the scheme, and most people will now be worse off under universal credit than under the system it replaces. New analysis by the Child Poverty Action Group and IPPR think tank found that once universal credit is fully implemented, there will be up to a million more children in poverty than if the original design had been maintained. The four-year freeze in the allowances and elements that make up universal credit awards, despite rising inflation, plays a big part in this. A good first step to avert increases in poverty would be to reconsider last year’s cuts to work allowances, which limit how much people can earn before they start to lose universal credit. A commitment to uprating in line with inflation would provide longer term security.