The botched and underfunded rollout of universal credit is starting to cause real hardship for many of the poorest and most vulnerable members of society.
The shocking deprivation revealed by our investigation today has many causes, but the proximate explanation for the misery being endured by the poorest members of society is the mismanaged and underfunded introduction of universal credit. Despite the extra resources announced in last week’s budget, and the welcome signs that the Department for Work and Pensions is listening to concerns about the impact of the scheme, additional finance and further reform is required.
For many years, universal credit was the holy grail of welfare reform. Rolling the six major benefits into one monthly payment would simplify an over-complex system and ease the transition of claimants into work. The former work and pensions secretary Iain Duncan Smith was passionate about universal credit. Her Majesty’s Treasury under George Osborne was less so. As soon as he was able to deliver a budget, in 2015, not dependent on Liberal Democrat votes, Mr Osborne cut £3.2 billion from the new super-benefit’s funds. Soon afterwards Mr Duncan Smith resigned. His big idea, however, limped on, dogged by IT disasters and an exchequer more interested in cuts than reform.
There was and is much to recommend a simplified system. Multiple benefits are so complex that not even some officials, let alone claimants, understand them. The benefit system has, by common consent, trapped generations of Britons in poverty and dependence. Tax credits failed sufficiently to incentivise work, and work is rightly seen as the best long-term solution to rebuilding self-esteem and helping deprived communities.
Yet whatever its faults, the complex system being phased out generally had the merit of keeping a roof over its beneficiaries’ heads and food on their tables. The introduction of universal credit has seen a distressing rise in debt and evictions, hunger and queues at food banks and diseases more normally associated with the 19th century than the 21st, such as rickets and scurvy. The former prime minister Sir John Major has warned of poll-tax style disorder if hardship is not alleviated. By 2023 seven million people will be receiving universal credit. Figures suggest that without reform, 3.2 million households will lose out while only 1.2 million will benefit. The hardest hit will be the self-employed, the disabled and those with more than two children.
The single most urgent reform required is that existing benefits should continue to be paid up until a claimant’s migration to the new system is complete. At present there is a five-week hiatus between the last old payment and the first new one. The government has agreed to shorten this period by 2020, but that is too far away. Poor people live a hand-to-mouth existence. They tend not to have savings or freezers full of food or relatives who can tide them over. They go broke instantly. Hence the phenomenon of teachers buying shoes for pupils and children wolfing down five bowls of cereal at school breakfast clubs.
It would be naive to imagine that all hardship is caused by lack of money. Poor parenting, substance abuse, and other addictions such as gambling play their part. However, a monthly payment can be challenging to people not in the habit of budgeting that far ahead. Domestic violence campaigners have criticised the fact that under universal credit, the household payment is made to the main earner rather than the main carer — a problem for women in abusive relationships or in families dealing with substance abuse.
With public sector pay unshackled and wages starting to rise, not only is welfare still frozen but now it emerges that the transition to a new system has plunged many of the country’s poorest inhabitants into destitution. As Sir John commented: “That is not something that a majority of the British people would think of as fair.” He’s right. It isn’t.”