By Refusing to Delay the Universal Credit, the Tories are Failing the Poor
Before the 2010 election, David Cameron set a benchmark upon which voters should judge his government: ”The test of a good society is you look after the elderly, the frail, the vulnerable, the poorest in our society. And that test is even more important in difficult times, when difficult decisions have to be taken, than it is in better times,” he declared.
Seven years later, to many that might seem like a poor joke.
Since attaining office, the Conservatives - at first in coalition with the Liberal Democracts, then alone - have instituted a public sector pay cap so that since 2013-2-2014 all but the lowest incomes have risen by 1%. This cap had affected 5.1 million workers, 1.6m of whom work in the NHS alone.
It was only public pressure - and political panic - that caused the government to steer its policy away from a cap until 2020. While it could be argued that public sector pay had outsripped the private sector, many of the jobs - firefighters, police officers, nurses and doctors - are roles upon which it is impossible to place a market value. Who can judge what running into a burning building to save lives is worth?
Many of the more upsetting moments of the election came as those affected told of their daily struggles to keep their heads above tough financial waters. The Autumn Budget will reveal how the Chancellor of the Exchequer, Philip Hammond, will respond to the new political dynamic.
The months since the election have presented the government with a further challenge. The public sector pay cap will impact the lives of millions: cuts to the Universal Credit will affect more.
Despite opposition pressure and Tory doubts, the government has decided it will continue with its roll-out of the controversial benefit scheme; it is also implementing cuts of £4bn per year up until 2021. These cuts will make many families subsisting on Universal Credit up to £2,800 per year worse off.
Britain needs a debate about the future of welfare. Our Welfare State needs to be sustainable as population and work patterns change. At times, governments will have to make unpalatable decisions. There is no utopian solution. Politicians should not pretend otherwise.
However, these cuts - encompassing in-work benefits and family allowances - make daily living harder for those who are “just about managing”: rising inflation - at a five-year high - and a slowing economy are worsening the benefits freeze and stagnant wages. These cuts also trap people in low-wage employment: three-quarters of low-paid workers are still there a decade later; Universal Credit is doing little or nothing to provide financial incentives for work progression: many workers keep a mere quarter of extra income earned.
The government has tried to change the welfare system on the cheap. They have made radical changes while slashing budgets. They have spoken about creating work incentives and improving life chances, but their actions point in the opposite direction.
It is unacceptable for the government to press ahead with a roll out when there are such known problems
When she took over as Prime Minister, Theresa May sacked George Osborne. She should have followed this up by reversing his cuts so that Universal Credit put incentive as its key aim. It is not too late, though she will no longer be afforded the political - excuse the pun - credit.
Changing systems is bound to incur problems. However the rigidity of Universal Credit has meant many claimants waiting weeks for payments, leaving them in rent arrears or worse. The misery caused it not mere anecdote.
Rightly, Jeremy Corbyn has made this failure a central attack on the government. Shadow Welfare Secretary, Debbie Abrahams, campaigned successfully to make the Universal Credit helpline free at the point of use. That is a small victory though.
It is unacceptable for the government to press ahead with a roll out when there are such known problems. David Gauke, the Work and Pensions Secretary, has admitted that one in five recipient face delays in their benefits. The Prime Minister claimed that half of those facing financial difficulties receive an advance. That the government abstained on a non-binding vote rather than face defeat shows the weakness of their case.
When Iain Duncan Smith launched the Universal Credit, he saw himself in the mould of that great welfare reformer William Beverage: the new system was designed to simplify a complicated maze of benefits and also alleviate poverty. On both measures, Universal Credit has failed.
The government needs to embrace reform so that it provides greater flexibily for claimants, and greater incentives to escape the trap of low-income employment.
If not, Britain will see another vast increase in inequality that marred the 1980s. There is an alternative.
By reducing the tapers on which credits are withdrawn, the government would allow families to keep more earned income. Aiding career progression should become a key part of a flexible claimant-focussed Universal Credit. By switching to a more regular payment system, when necessary, they can ensure claimants do not get into financial difficulties. Finally, the financial benefits for private firms to take punitive action against claimants must end.
If David Cameron set the Conservatives a challenge for office, it was one his predecessor seemed ready to take up. Her rhetoric has not been matched by bold, or any, action. That too must change.
About the author
Disclaimer is a group of writers, journalists, and artists who have been brought together by their desire to tackle serious issues with a light and humorous touch. A mixture of idealists and pragmatists, Disclaimer is socially very liberal, economically less so. The editorial stance is formed collectively, based on the shared values of the magazine. Gonzalo Viña founded Disclaimer with the help of Phil Thornton who oversees the economics coverage. Graham Kirby is the editor.
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