category:
Credits and Loans

Universal credit is turning into a social disaster

If the Conservatives are trying to prove they’re no longer the nasty party, they have a funny way of going about it.

Universal credit is a good policy, badly implemented, and families are suffering as a result.

Back in the early days of the coalition, David Cameron and his ministers had seized the narrative on the economy and welfare. Labour, they said, had over-borrowed, over-spent and left a generation of working age people overly reliant on benefits. Polling showed that voters agreed.

The Tory-led coalition won public support for austerity and the argument that the benefits system had to be changed to “make work pay”.

In this context Iain Duncan Smith, as work and pensions secretary, devised universal credit, a new benefit absorbing six benefits which would ensure, he insisted, that claimants would be better off financially — and, in turn, mentally and physically — in work.

After 13 years of a Labour government that was ultimately too afraid to “think the unthinkable” on benefits, as Tony Blair asked of his first welfare minister Frank Field, the Conservative Party, which had lost power for being perceived as inherently nasty, dared to carry out reform.

With public backing, they had an opportunity to rescue people on benefits, to bounce them out of the welfare safety net and let them stand on their own two feet. But that opportunity has been squandered.

As it was originally conceived, universal credit is a good policy. It is a myth — perpetuated by that particularly nasty image conjured up by George Osborne when he talked of people going out to work and seeing their neighbours’ blinds closed — that the vast proportion of people on benefits are “workshy scroungers” too lazy to find work.

The “strivers versus shirkers” narrative was unnecessarily harsh, because there was widespread acceptance that most people on benefits wanted to work if it would mean more money — it was just that they were locked in to welfare by the prospect of low wages and punitive childcare costs outside it.

And that was what universal credit was all about — stripped of this nasty narrative — because it would have incentivised work.

Instead, universal credit is turning into a social disaster.

Once the benefit was piloted in 2013, George Osborne who was chancellor at the time, began to cut into payment levels after years of asking the poorest to pay for austerity. The Institute for Fiscal Studies now predicts 2.1 million families will lose money under the new system, compared with 1.8 million who will gain.

As it has begun to be rolled out across the country, the problems of universal credit are clear.

People are made to wait six weeks for their first payment, forcing them to rely on loan sharks or go hungry. Because universal credit replaces housing benefit, which used to go direct to landlords, some are refusing to take tenants claiming the credit.

And in what seems to be an unnecessarily cruel twist, anyone who wants to call the Department for Work and Pensions helpline to ask for advice or set up an alternative payment arrangement is charged 55p a minute.

While this is the rate from a mobile, fewer households have landlines from where it would cost 9p a minute.

Liz Truss, the chief secretary to the Treasury, said this week that anyone who did not want to pay 55p a minute could simply go to the job centre but apart from the difficulty this would pose to many, particularly those with children, 68 job centres are due to close this year alone.

No 10 says people calling the helpline can ask for a call-back — yet this only comes after they are put on hold for several minutes, racking up a large bill.

There have been stories of those on universal credit being made homeless because they cannot make rent, and losing their children as a result. The spectre of Tory nastiness is looming large once again.

The 12 Conservative MPs who wrote to David Gauke, the work and pensions secretary, last month asking for a delay in the rollout of universal credit understand this.

But when asked about the harsh implementation by Jeremy Corbyn at PMQs this week, Theresa May dodged the questions, saying only that she wanted to see universal credit “working for people”. Clearly it is not.

If the government doesn’t care about those on benefits, and it has some way to prove that it does, then perhaps it cares about its own reputation.

Having lost power in 1997 as the nasty party, as May herself acknowledged years ago, once it regained power in 2010 it had the opportunity to reform welfare for the benefit of the poorest in society.

And the political capital is there: research published this month by James Tilley and Geoffrey Evans revealed a massive 18-point jump in the working-class vote for the Conservatives between the 2015 and 2017 elections — a leap that is over and above the predicted flight from Ukip to the Tories.

The prime minister may find she will lose this new-found working-class support if she does not soften the brutal aspects of universal credit. If the Conservative Party finds it does not have a heart, it should at least show it has a head.