Universal credit crisis caused by Tories' £12bn of 'salami-sliced benefit cuts', says architect of policy

'You can’t balance the books on the backs of the poorest people in the country, if you are going to make a reform like universal credit work'

Rob Merrick
Deputy Political Editor
Saturday 27 October 2018 14:15
Universal credit was introduced alongside the benefit freeze, the benefit cap, the 'bedroom tax' and curbs to council tax support
Universal credit was introduced alongside the benefit freeze, the benefit cap, the 'bedroom tax' and curbs to council tax support

Universal credit has been fatally undermined by the Tories’ other brutal welfare cuts, an architect of the controversial shake-up warns today, as demands grow for a U-turn in Monday’s Budget.

Most of the misery caused is the inevitable knock-on from £12bn of “salami-sliced cuts”, including the benefit freeze, the benefit cap, the “bedroom tax” and curbs to council tax support, Deven Ghelani said.

“You can’t balance the books on the backs of the poorest people in the country, if you are going to make a reform like universal credit work,” the former Department for Work and Pensions (DWP) adviser told The Independent.

The fresh criticism of Conservative welfare cuts comes amid a blizzard of pressure on the chancellor to act on the crisis surrounding universal credit in Monday’s Budget:

* A Commons committee is calling for the extension of universal credit to be shelved until the DWP can show it will not push “one more claimant over the edge”.

* Labour has published 10 demands for immediate changes, including slashing the five week wait for payments, and an end to sanctions and split payments (to protect victims of domestic violence).

* The Children’s Society is warning families will lose up to £2,460 per year without a rethink, including 100,000 disabled children who will be as much as £147 a month worse off.

Philip Hammond, the chancellor, is expected to announce some shift on universal credit after as many as 30 Conservative backbenchers threatened a revolt.

The rebels want around £2bn to protect the hardest-hit groups – single parents and second earners in families – before a rollout the Department for Work and Pensions has already delayed.

However, the clamour for radical changes to universal credit now stretches far beyond the calls to reinstate the £2bn of cuts put in place by George Osborne back in 2016.

Today, the all-party Commons Work and Pensions Committee says a plan to put 4 million more people on the benefit must be halted without changes to prevent “unmanageable” debt.

Claimants will start moving over from mid-2019, rather than January as intended, but the move will “pile debt upon debt, trapping people in a downward spiral of debt and hardship”, the committee says.

Its report attacks the five week wait for a first payment, the requirement to pay back emergency advances and the DWP’s “aggressive approach to collecting debts”.

Frank Field MP, the committee’s chairman, said: “The DWP must not push one more claimant onto universal credit until it can show that it will not push them over the edge.”

Labour echoed the criticism, as it released a 10 point plan which also includes scrapping compulsory online claims, after it was revealed that one in three claims are abandoned because of difficulties.

The party also wants to give tenants the right to have their housing benefit paid directly to their landlord, following evidence that some are falling into debt.

Margaret Greenwood, Labour’s work and pensions spokeswoman, said: “Universal credit clearly isn’t working. Instead of helping people it is punishing the very people it should support.

“We have set out 10 demands on government to address the crisis. The chancellor should use this Budget to take immediate action and put an end to the suffering.”

The government has repeatedly insisted that the £15.8bn shake-up, which squeezes six separate working benefits into a single payment, is working well.

But Mr Ghelani, who advised Iain Duncan Smith on introducing universal credit at the start of the decade, pointed to the vast other welfare cuts as the “biggest” cause of the current problems.

“The core issue is the £12bn of salami-sliced cuts which means people on benefits are already under huge financial strain, even before they are asked to manage the change onto universal credit,” he said.

“There is more to come in the years ahead, when universal credit is already less generous than the benefit system it replaces.

“On top of that, the local organisations helping to deliver it are also under strain so are less able to help claimants, and the DWP itself is having to implement it as it has to make big savings.”

Mr Ghelani, who now runs a welfare consultancy called Policy in Practice, insisted the shake-up could still be a success, even if it is far from “the promised land” envisaged.

But he added: “The problems with tax credits in the last decade, and with housing benefit in the 1980s, were only solved by spending lots of money – you can’t do welfare reform on the cheap.”

A DWP spokeswoman said it had “already announced several improvements” to universal credit to make it work more smoothly.

They included “plans to reinstate housing benefit for vulnerable 18 to 21-year-olds, offering 100 per cent advances and providing an additional two weeks of housing benefit for claimants”.

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