Universal Credit is the current UK Coalition Government`s new ideological attempt to stem the billions spent on benefits and encourage the conception that it is more advantageous to be in work than out of it. It has very gradually been rolled out across the country since April 2013 and is intended to be nationwide in due course. However, delays are already being experienced and the full scale rollout pencilled for October has been set back until spring of 2014. The basic premise is that no family, whatever their circumstances will receive more than 500 a week in government payments. Disability Living Allowance will not come under Universal Credit but be renamed Personal Independence Payment. The Labour opposition accept that something had to be done about a benefits culture which had grown into a colossus, often making it more lucrative to stay on state handouts than to seek employment, however they have caveats about the implementation process as do many churches and leading charities.
A key problem with Universal Credit is that it is a simple “one-size-fits-all” idea and yet benefits, (and those who claim them) are by their very nature, complex, vary enormously according to individual circumstance and needs and are resistant to easy simplification. The organization problem stems from the necessity of a gargantuan IT system to make all these conversions and start to operate efficiently. Rather like the failed NHS IT project which was eventually abandoned after costing 12.7 billion, the IT system for Universal Credit is not up to the job yet. Even were all of its apparent glitches to be ironed out, the IT system is then going to be reliant on all claimants having online access to monitor their accounts. Clearly this is not the case, not all households have computers, especially those on low incomes, nor do they know how to use them, even were they available at their local library.
A leaked staff survey from the Department of Work and Pensions revealed that the civil servants working on the current IT system were incredulous at how flawed it was. One member of the Universal Credit staff team reported “After 29 years of service this is the most soul destroying work I have ever done”. Pretty discouraging words from the Government`s main flagship for welfare reform. Unverified bloggers have said that 300 m of IT work has already been scrapped as not fit for purpose. As one commentator has written “If it is to work then the most complex IT system ever needs to be put in place”.
Whether or not these issues will get resolved remains to be seen. The DWP are certainly tight-lipped on the subject. What is certain is that the Government will do their level best to implement the scheme before the next election. Replacing all former benefits, Jobseekers Allowance, Income Support, Child Tax Credits, Working Tax Credits and Housing Benefit, the Universal Credit is designed to mimic a monthly wage. The thinking behind this is to encourage a work like mentality. Those on low incomes who move in and out of work, perhaps as agency or casual workers, will not be disincentivised, as they may have been under the old system, by repeatedly having to sign on and off. There will not be an automatic cut off when an out of work person starts a new job or a low paid worker increases their hours.
Assuming that Universal Credit does go ahead, who will be the winners and losers? Estimates at the moment are that 3.1 million households will be entitled to more benefits under Universal Credit, with 2.8 million households entitled to less. The Institute of Fiscal Studies predicts that couples with children will fare the best, however, this may not be the case for the second earner in the family. A couple with children could potentially be 16 a month better off, whilst a couple without children will lose approximately 4 a month. It is not possible to make accurate predictions as yet with so few households embarked upon the scheme. The Joseph Rowntree Foundation has concerns about the impact on low income families but is reserving judgment until such time as they can assess it properly. In a statement, they said: “We support the principles behind Universal Credit, but don`t yet know whether in practice it will be better than the old system. We will be monitoring its impact”.
What seems likely to happen is that some families will be worse off than before under Universal Credit and the consequences for them could be dire. Against a background of low employment, rising costs of living and a possible house move owing to the bedroom tax perhaps to an area of even greater unemployment; there will be people in the UK who simply cannot afford to meet their overheads. It may lead to agencies such as Citizens Advice being inundated with requests for help and in the worst case scenarios, people having to ask for bankruptcy advice. The future of welfare reform in the UK is on a knife-edge and it is troubling to consider what social problems may erupt if Universal Credit turns into a giant shambles.