The Budget didn't even scratch the surface of Universal Credit's problems

By Bernadette Meaden
October 29, 2018

People responsible for designing and implementing Universal Credit, like Iain Duncan Smith and Deven Ghelani, would like us to believe that all would have been fine if George Osborne’s cuts hadn't sabotaged their great reform. There is a danger that this could fool people into thinking that minor concessions like those made in the Budget mean Universal Credit has been fixed. The truth is, not only have the Chancellor's measures not reversed Mr. Osborne’s cuts – they have not even scratched the surface of the problems with Universal Credit.

With or without cuts, Universal Credit was always going to be a policy disaster of epic proportions. It cannot be fixed by simply making it more generous. The problems are too numerous and too fundamental.

Many problems spring from the fact that Universal Credit was based on Iain Duncan Smith’s belief that “the nature of the life you lead and the choices you make have a significant bearing on whether you live in poverty. Policy-makers regularly fail to understand this, instead viewing poverty through a financial lens only.” Universal Credit was not designed to support people in poverty by redistributing wealth, it was designed to change people, and change their behaviour, through various 'incentives' and penalties.

So here are just a few of the design features which will continue to fuel debt, foodbank use, and homelessness.

Making a claim. Despite ‘simplifying the benefit system’ being touted as one of UC’s main selling points, for those who actually need to claim, it is anything but simple. As Citizens Advice says, “In total there are 10 stages to making a Universal Credit claim, many of which are time sensitive. If a deadline is missed, a claim may have to be started again.”  And of course, Universal Credit was designed to be ‘digital by default’ giving no consideration to people who cannot use or do not have easy access to the internet.

Then there is the (minimum) five week wait for a first payment. Anyone living on a very low income, in work or out of work, cannot wait five weeks for the money they need. Anyone who doesn’t understand that should not be working in what we used to call, and what used to function as, social security. And to imagine that an Advance Payment, which has to be repaid from a minimal income will in any way help, rather than just compound the problem, simply illustrates another failure of comprehension. There appears to be some mental block which prevents anyone in government understanding that when your income is too low to cover even essential outgoings, borrowing money, even interest free, is not the solution. People need higher incomes.

The Minimum Income Floor for self-employed people. Millions of self-employed people (many of whom are in ‘sham’ self-employment) live in poverty. They will need to claim Universal Credit. But UC assumes that after one year’s self-employment, everybody is earning the equivalent of 35 hours  a week on the minimum wage, and their UC payments are calculated accordingly. The problem is, as the TUC recently pointed out, two million people are not earning this much.  So for these two million workers, Universal Credit will fail them by design.

Then there is the problem of childcare. Again, by design, Universal Credit expects parents to pay for childcare up front and be reimbursed later – maybe much later. Organisations like Save the Children have pointed out that for poor families with no savings this can create a spiral of debt.  

Single payments to a household. From the outset, domestic abuse charities warned that this feature of Universal Credit would empower domestic abusers. For five years those warnings were ignored. This April, the DWP Select Committee said, “there is a risk of "financial abuse": the paid partner withholding money to exert control and make it difficult for the other partner to leave. The only alternative currently offered by DWP – one partner requesting separate payments – carries the obvious risk of further violence and abuse when the abusive partner inevitably finds out.”

In response the DWP displayed a denial of reality that would be laughable if it wasn’t actually dangerous. Minister Kit Malthouse said, "this is not a new scenario [?]… so the implication that UC will exacerbate the issue of domestic violence is completely without foundation". He went on, "the Government would not want the Committee to make the mistake of thinking that the greater use of split payments can help tackle the scourge of domestic violence". Well, no – but the use of single payments hands more power to abusers, an extraordinary thing for a government to do deliberately, knowingly, and against all warnings. 

For disabled people and people with a chronic illness, Universal Credit has cruelty built in. The cut to the allowance for a disabled child which the DWP itself anticipated would affect 100,000 disabled children seems gratuitously harsh. What kind of person sits down and thinks it’s a good idea to take money from disabled children in poor families?

As early as 2012 it was clear what Universal Credit would mean for disabled people. Baroness Tanni Grey-Thompson wrote, “Under the new system, financial support for some groups of disabled people will be much lower than current support available for people in the same circumstances. Cuts such as those to support for most disabled children and disabled adults living alone are going to make the future considerably bleaker for many of the most vulnerable households in Britain.” Again, all down to the design of Universal Credit, nothing to do with later cuts.

Simplicity means inflexibility. The idea behind UC, that social security payments rise and fall in line with your earnings, sounds good. But technical features mean that the patterns of people’s work payments can completely mess up their UC payments. If this happens, the DWP helpfully explains, “you will be notified that your income is too high and you will no longer get Universal Credit.” There is no ‘averaging out’ of earnings, as with the old system, so people will have their claim stopped and need to start it again. It is a recipe for financial instability and insecurity. The DWP explains it here (Scroll down to the infographics.)

Then there is the two child limit, (people must not have children they can't afford, and we can all predict our financial positions until our children reach 18, can't we?) with its unspeakable rape clause. And of course sanctions, the immoral and deliberate imposition of cold and hunger as a punishment, which would not be allowed in prison, will be extended to low-paid workers as well as those who are out of work.  And so it goes on…

And let’s remember – if Universal Credit continues, this is the future of social security for everybody on a low income in the UK. That’s a sizeable section of the working-age population, having their lives scrutinised, monitored and ‘nudged’ by a government department on an almost permanent basis, just to have an income on which it’s possible to survive. We deserve much better. We are worth more than this.

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© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden

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