O Opinion

Universal Credit – Right Idea But Wrong Execution?

Since 2010, the idea of universal credit has been a contentious issue. Recently, the government has been accused by ministers of being indifferent to the problems that universal credit has caused. But despite its issues, many are still confused as to what it actually is and how it can affect everyday people.

So what is universal credit? In essence, it is a new social security payment which aims to simplify working age benefits and incentivise paid work, replacing six means-tested benefits and tax credits, including Housing Benefit, Working and Child Tax Credit, Income Support etc and making it into one simple payment for claimants. First proposed in the 2010 Conservative Party Conference by the then Work and Pensions Secretary Iain Duncan Smith, the system’s aim is to not only simplify Britain’s welfare system but also reduce the significant cost of maintaining six different benefits systems (another product of austerity). One unique feature of universal credit is that it is designed to ensure people are incentivised to stay in work rather than continuing to claim benefits. This is done by gradually tapering off the benefit payment as the claimant enters work, instead of ending immediately after the claimant works for more than 16 hours per week. Under universal credit, you lose 63p in benefits for every extra £1 you earn.

The new system – even though it was proposed in 2010 – has only begun its implementation throughout the UK a few years ago, owing to delays. As of October 2018, there are over one million receiving payments, with a further 3 million more claimants expected to move from the old system to universal credit from next year onwards. This colossal overhaul of the welfare system has been supported by many, with the government claiming that more people are heading to work under universal credit than under any other benefits system in British history. That may be the case, but the level of criticism about the programme and its ongoing problems put all of these positive claims about universal credit into doubt.

Many have criticised the surge in costs to universal credit, a programme specifically designed to cut the huge cost of managing six different benefit systems. Originally set to cost £2 billion, the cost has now grown six times larger to £12 billion. The National Audit Office has maintained their position, still arguing that universal credit will still cost more than the previous benefits system. The reasons for this astronomical rise in costs is attributed to software problems and duplication of systems. The same excuse is also used to explain the long delay in fully implementing universal credit, with some speculating that the system will not be fully operational until 2023.

To make matters worse, 24% of claimants are having to wait at least five weeks before they receive their first payment. This is particularly affecting housing benefit claimants, leading them to fall behind on rent payments, who risk becoming ‘homeless and destitute’, according to Dame Louise Casey. This argument has been taken further, with many politicians, benefit recipients, whistle-blowers etc saying that many claimants are forced to sell their possessions and even use food banks as they are still waiting for payments. And even then, the payments cannot cover basic living expenses, making the lives of already struggling claimants even worse. This system is showing itself to be a damning indictment of the government’s welfare policies, making the lives of those who need the government’s help to get back on their feet even worse.

 

Despite all its issues (these are just a handful), the government is aggressively going forward with universal credit by still claiming that it will help over 3 million households once fully set up. This is still not doing any favours for those who are still struggling to make ends meet and are forced to take drastic measures to survive. One of the great pillars of this country is its welfare system. The safety net which helps those in need get to a position where they do not have to worry about losing their home, having enough to eat etc. Inevitably, there are some who will abuse this generous system, finding it easier to take money from the government without finding work and not contributing to society as a whole. Therefore, universal credit’s idea of encouraging people to work by gradually decreasing the benefits they receive until claimants are able to support themselves independently incentivises work and reduces abuse of the system. Furthermore, the idea of creating one universal benefits system does simplify things in theory, but this has failed in practice. To know that people are not receiving payments, some of which have been waiting for several months, because of software problems and logistical issues is frankly embarrassing and something which can easily be resolved. Universal credit’s implementation did not have to take as long as it did, and it should not have cost as much as it did. Whether the government can recover from this position as soon as universal credit is rolled out to all benefit claimants in time is another question. We will only see what happens when the system is officially rolled out to all claimants from next year onwards.

 

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