Politics Simplified: Universal Credit

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Universal Credit was championed by the former Work and Pensions Secretary Iain Duncan Smith. He sought to incentivise work and simplify the benefits system by combining tax credits, unemployment and housing benefit into a single means-tested monthly payment. However, the result has been less money for vulnerable people to live on, with the Trussell Trust reporting a 52% increase in food bank usage across areas in which this welfare reform has been implemented. Therefore it is unsurprising that there have been cross-party calls for either reforms or replacement of Universal Credit.

Those with fluctuating incomes such as seasonal workers and the self-employed face discrimination, losing out financially due to the way that income determined payments are calculated. The digital nature of Universal Credit is also problematic, as not everyone has easy access to technology and errors on forms may result in the loss of benefits. Sanctions are tough, with even minutes late to one of the regular job centre appointments resulting in lowered or cancelled benefits. This has caused a great deal of stress and anxiety to claimants who view the process as insensitive and humiliating.

A complex application process has resulted in late payments, with a quarter falling into debt in the meantime. The Residential Landlord Association has discovered that 61% of Universal Credit tenants are struggling to pay rent, compared to 27% two years ago. Landlords are known to deny housing to claimants who are viewed as unreliable, doing this partly due to inflexible mortgage lenders.

Universal Credit has also been criticised for its effects upon women and their families. For example single parents (91% of whom are women) must prepare for work from the day their child is one year old, and actively seek employment once their child is three years old. As three year olds are still too young to attend primary school, childcare must be arranged. Furthermore, the Women’s Budget Group are dissatisfied with monthly payments being made to couples through a single bank account, which they argue could enable abusive partners through financial control. A further problem with the current system is that families with more than two children must stretch their budgets as they receive no extra financial support.

In July, Secretary of State for Work and Pensions Ester McVey had to apologise to MPs for ‘inadvertently’ misleading them. This was after she falsely claimed the National Audit Office (NAO) had requested the implementation of Universal Credit be accelerated. The NAO’s report had actually highlighted the hardship brought about by this welfare policy, furthermore suggesting it was not value for money. Despite Theresa May suggesting years of austerity are coming to a close, McVey informed the Cabinet that families being shifted to Universal Credit will lose £200 a month. Worryingly, it is alleged that more than 22 charities supporting claimants have been forced to sign a gagging clause preventing criticism of McVey and her policies.

Adjustments have had to be made to lessen claimants’ hardship, with a reduction of the 42 day wait for the first payment by just a week. Also, two weeks of housing benefit will be granted in the transition period. After Jeremy Corbyn raised the issue of an unfair and costly 55p per minute charge for a help-line, the Government gave into pressure, making the number free.

The full rollout of Universal Credit was supposed to have occurred last year, however  it is now predicted to be complete in March 2023. Iain Duncan Smith, who resigned from the Department of Work and Pensions in 2015, has argued that it is simply not getting enough funding, calling for an extra two billion pounds. On the other hand, Shadow Chancellor John McDonnell has labelled the welfare reforms unsustainable and unreformable, signalling that a Labour government would ditch the policy. Tory backbenchers such as Heidi Allen plan to rebel against the government if no extra funding is allocated. The Archbishop of Canterbury has also weighed in on the debate, calling for Universal Credit to be halted. Former Prime Ministers Gordon Brown and John Major have warned that Universal Credit is as unpopular as the Poll Tax, which ultimately brought Margaret Thatcher down from power.

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