Benefit freeze is the real problem, not universal credit

18th Oct 2017

Ahead of the autumn budget, Campbell Robb says the pressure is on the government to tackle the challenges facing those people struggling to make ends meet every day.

As the autumn budget draws closer, the pressure on the government to tackle the very real challenges facing millions of people struggling to make ends meet is becoming greater every day.

Currently the deep-rooted problems within universal credit are the focus of this pressure, with much of the scrutiny centred on people’s experiences as they move over to the new system.

But the row over when and how quickly the system is rolled out is masking a far more serious problem. The four-year benefit freeze is predicted to increase poverty more than any other policy.

This centrepiece of the austerity measures means there will be half a million more people in poverty in 2021 than there would be if benefits kept pace with inflation.

Universal credit has the potential to dramatically improve the welfare system, which is fragmented, difficult to navigate and can trap people in poverty.

If fully implemented and properly funded it should be simpler, help smooth people’s transition into work and will respond better to people’s changing circumstances.

But by continuing the freeze, the government risks undermining its ambition to make work pay for those on low incomes.

If government does not end the freeze, people on low incomes will find themselves out of pocket whether they are working or not.

In 2020, the freeze will mean a family of four receiving universal credit will be over £800 a year worse off, even if both parents are working full-time on the national living wage. The refrain of a government on the side of ordinary working families will ring very hollow.

The benefit freeze began in April 2016, when inflation was 0.3 per cent. The most recent set of inflation figures, released yesterday, put CPI inflation at 3 per cent.”

UK price inflation and earnings growth

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But the prices for some basic essentials, which people on low incomes typically spend a larger proportion of their incomes on, have been rising even faster.

The problems people face as they move onto the system are significant and the government needs to listen to what claimants are experiencing.

The arbitrary seven-day wait before people can claim benefits is a policy decision which can and should be reversed as an immediate priority, and allowing claimants more choice about the frequency of payments would help reduce waiting times further.

But we must not allow these issues to take the focus away from the damage that the benefit freeze is doing to the incomes of millions of families, including those who aren’t yet on universal credit.

Fourteen million people living in poverty cannot afford to wait until after Brexit before action is taken to improve their lives. We need a national mission to transform the prospects of our worst-off people and places.

The autumn budget is an opportunity for the government to deliver on the prime minister’s pledge to help ordinary working families and prevent further hardship. With the cost of living rising fast and real wages falling backwards, it’s time to end the benefit freeze.

First published in Times Red Box.