11 January 2019

Universal Credit can still be a game-changing policy


This morning, from a Jobcentre in Kennington, Amber Rudd delivered her first major speech as Secretary of State for Work and Pensions. The top line takeaway that will be carried by most media outlets will focus on her decision to reverse the two-child cap on benefits for existing claimants. Few people will disagree with this. As the Secretary of State said it is the “compassionate” and “fair” thing to do. The purpose of welfare reforms introduced by the last Government was never primarily to cut costs, but to help people escape the crippling effects of an antiquated system.

However, Rudd’s speech was more than this one policy announcement. She set out her own aspirations for Universal Credit (UC) and welfare reform in the UK. What was so pleasing is the extent to which she understands the benefits of not only bringing about greater fairness through the new system, but (even more importantly) its potential to transform lives.

The Centre for Social Justice has long championed UC as the fairest mechanism to help people in to work, make work pay and provide support in times of need. We firmly believe that the old system wasn’t fair, either to those people who did work and pay their taxes or to the people who were stuck on a confusing myriad of complex entitlements that penalised them from getting work and earning an income. It was good to hear the minister reiterate the principle that we should build a welfare system that is fair to future generations who deserve more than a life trapped on state support.

Her immediate priorities for Universal Credit are the right ones. The adjustment to managed migration (announced last week) and the trial of 10,000 claimants (instead of 3 million) will help the DWP test their systems and ensure they work for all. Tragic cases of claimants going more than five weeks without payment need to be dealt with. The problem isn’t in how UC is structured, but in how the system can become more adept at dealing with individual claimants. It is clear from this morning’s speech that tailoring support for all claimants is key to the Department’s agenda.

It was also important to hear the Department were making progress on other adjustments. The increase in flexibility, allowing claimants to opt for bimonthly payments or private sector renters to apply for direct payments to their landlords, are welcome steps that will help many of the most vulnerable in society.

Lastly, the increased availability of the Flexible Support Fund for upfront childcare costs was a recommendation made in a recent CSJ report, and we are pleased to see the Department has acted on that advice. Female employment rates in some South East Asian communities are the lowest in the country and so we were also pleased to hear there will a specific commitment to help tackle these injustices.

No-one should forget what UC is replacing – six different benefits, administered by three government departments, marginal tax rates of up to 90 per cent, huge disincentives to find work, complexity in each individual application process and little support for claimants doing so. We found out this morning that 700,000 claimants on the old system aren’t even claiming their full entitlement because the process is so confusing.

It was neither compassionate nor effective. UC will change that. It will support people in to work while ensuring the support people are entitled to is taken up fully. Remember: having a job reduces the probability of being in poverty by around 75 per cent. UC will change lives if we invest in it and get it right.

After this morning every indication suggests UC can be the game changing policy it was designed to be.

Patrick Spencer is Head of Work and Welfare at the Centre for Social Justice.