Universal Credit joint report: “Universal Credit is in danger of failing to deliver on its key objectives”


A joint report “Will Universal Credit work?” prepared by the TUC and the child poverty action group has raised serious questions over the coalitions new Universal Credit benefit due to be implemented nationwide beginning in October 2013. The report looks at Universal Credit’s main objectives namely; reducing poverty, making work pay and benefits simplification. Unfortunately these main objectives according to the report are in danger of not being met. Frances O’Grady the TUC General Secretary stated “Universal Credit is not bad in principle, but taken together with the other benefit changes introduced by the government, it will make most people worse off. And for all the claims of simplicity, in practice it is such a complex system that the government has been forced to delay its roll-out. We also concerned at the impact Universal Credit will have on disabled workers, as well as its plans to take away benefits from second earners as soon as they find work. Ministers must not turn a blind eye to these problems or Universal Credit will fail to help those very people it has been designed to support. This report provides a useful blueprint for improving Universal Credit so that it can make a real difference to families.”

The CPAG Chief Executive Alison Garnham offered “Universal Credit seeks to address many of the shortcomings of the current benefits system by being simpler and providing incentives for claimants to earn more. But Universal Credit lets itself down on many fronts. It introduces new complexities into the benefits system such as joint payments and new rules on savings. In addition, the financial gains for many are underwhelming, and the new system will rely as much on the stick as the carrot to incentivise claimants into work. Universal Credit is also blind to conditions outside of the benefits system: a lack of suitable jobs, the high costs of housing, and expensive childcare to name a few. Taken in isolation, Universal Credit may increase some households’ incomes, but what financial gains they receive are more than wiped out as a result of the government’s broader programme of cuts. Many of Universal Credit’s shortcomings can be fixed but if the government wants to reduce poverty, it needs to take a long, hard look at its broader policies rather than expect Universal Credit to save the day.”

The report concludes “Taken in isolation, the UC model represents a real advance on the current social security system on many counts. It can only be a good thing that claimants deal with one rather than multiple agencies; that they do not face cumbersome and time–consuming procedures when they move in and out of work; and that they fill in only one form for their living costs, children, housing and disability payments. The smooth single taper means that they will know how much they gain from work, and together with the earnings disregard, this ensures that some claimants will be better off than under the current system. But UC, of course, will not operate in a vacuum. It is being developed in the midst of an austerity programme that will have cut over £18bn a year from the social security budget by 2014/15, and threatens to take a further £10bn from welfare spending in the subsequent two years alongside wider cuts to DWP and HMRC staffing levels. UC will be launched in the face of a weak economy characterised as much by underemployment as unemployment, a real challenge for a benefit whose success is premised on people moving into (more) work. In the longer term, structural conditions such as the hollowing out of the labour market, which limits progression opportunities for those in lower paid work, may also jeopardise the ability of UC to deliver on many of its promises.

In addition, there are weaknesses in the model itself. If UC truly wants to simplify life for claimants, it needs to recognise that many complexities will remain in the UC system and take steps to address them. If UC is to incentivise work, the government needs to think hard about the lack of a second earner disregard, the limited support provided for childcare costs, and the continuing existence of cliff edges in the system as a result of localising CTB and the as yet unresolved question of FSM. And if UC is to tackle worklessness and poverty, it needs to ensure that the real barriers to employment are removed at the same time that awards are set at sufficient levels to protect claimants from destitution.”

The report offered the following recommendations to the government:

1) Introduce a second earner disregard to ensure that non-earning members of a couple have the same work incentives as primary earners.

2) Increase support for childcare from 70% to at least 80% of costs for all, thereby going some way to reduce the barriers to employment for parents.

3) Recognise the real costs of disability by ensuring that levels of support for adults and children with disabilities under UC are not lower than those provided under the current system.

4) Base assessments of self-employed claimants on their actual as opposed to presumptive incomes.

5) Extend transitional protection to those who move on to UC because of a change in circumstances such as the birth of a child, separation or partnering, or moving home.

6) Draw up an exceptions policy that is informed by evidence to ensure that the needs of those who cannot manage online applications, joint claims, monthly payments or direct payments are accommodated.

7) Ensure that local budgets to support claimants with the transition to an on-line system and monthly budgeting are generous enough to meet demand adequately.

8) Invest in specialist training for Job Centre Plus (JCP) staff to ensure they understand the real constraints faced by groups such as lone parents, those with disabilities and those with caring responsibilities when drawing up the claimant commitment.

9) Ensure that robust independent systems are put in place to monitor and review decisions to sanction.

Is Universal Credit failing before its begun? What do you, our readers think? Please let us know your views and opinions.



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