When it was first mooted by Iain Duncan Smith back in 2009, Universal Credit promised much.
The idea was clear and, arguably, pretty sound. One single monthly payment would replace the mind-bogglingly complicated array of benefits and tax credits claimed by the unemployed and low-paid.
As many who rely on benefits will tell you, fear of losing money is what most often prevents them from looking for work or finding a better-paid job. The new system would eradicate such concerns by making work pay and giving people an incentive to work longer hours and seek promotion, claimed Mr Duncan Smith, who has always said it was a visit to Easterhouse in Glasgow in 2002 that inspired his brand of “compassionate Conservatism”.
Frustratingly, however, over the years Universal Credit has delivered little. Hold-ups and costly IT glitches have prevented the full roll-out of the programme, while constant political pressure from the right of the Tory party to pay down the deficit by cutting the welfare bill has watered down the strengths of the original policy.
And according to new research carried out by the House of Commons Library following the summer Budget, what we are left with appears to be pretty much what we started with: work not paying for many.
Chancellor George Osborne may have backed down on cuts to tax credits, but Universal Credit did take a hit, with the changes meaning many single parent families in Scotland will find themselves worse off.
The research, commissioned by Shadow Scottish Secretary Ian Murray, shows that by 2020 a single mother of two who is new to claiming Universal Credit, working full-time on the new National Living Wage, will be more than £3,000 a year worse off. Those currently claiming the benefit rather than tax credits, meanwhile, will be worse off this year to the tune of almost £3,000, according to the research.
It basically comes down to the work allowance – how much someone can earn before their benefits are cut. Mr Duncan Smith originally proposed allowing claimants to keep 45p out of every extra pound earned. Current Government plans slash this to 35p.
And according to the Government’s own watchdog on child poverty these latest cuts will hit low-paid families hardest, undermining any benefits of the new national Living Wage.
If this is the case, it’s hard to see how the new system brings benefit to anyone at all. It’s all very well saying the deficit needs to be cut, but if it is the poorest in society that are continually bearing the burden, then such an approach raises economic as well as moral questions. Surely the best way to cut the benefits bill in the long term is to ensure that people have a realistic chance of moving off them?
Six years in, it’s time Universal Credit delivered on its vow to make work pay and offer a practical way out of poverty for the poorest in our society. Until then, Mr Duncan’s promises of compassionate Conservatism will ring hollow for many.
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