What future for Universal Credit?

Universal Credit can’t reduce poverty on its own, says Chris Goulden.

New figures have been released, showing what’s happening with Universal Credit (UC), the Government’s flagship welfare reform. It is a policy that is generally supported in most manifestos – although with qualifications for some.

  • The Conservatives would continue directly with the ongoing rollout: “We have begun to introduce Universal Credit – a way to simplify benefits into a new single payment – so that work always pays…” and would “…deliver Universal Credit, in order to provide the right incentives for people to work.”
  • The Liberal Democrats seem to agree and say simply they “will complete the introduction of Universal Credit in order to ensure people are always better off in employment.”
  • Labour say: “We support the principle behind Universal Credit – that there should be a smooth transition into work – but it must be affordable and fit for purpose, so we will pause and review the programme.”
  • The SNP also want to press pause on UC and say that roll-out should stop until new welfare powers come to Scotland.
  • Similarly, Plaid Cymru say that “UC would not be implemented until a fully independent and comprehensive review is carried out”. If it were implemented then they would “support the provision of weekly rather than monthly payments directly to individuals not households and without the requirement for internet access or IT skills”. They are also “concerned that the tax rates for UC act as a barrier to work” and would change this.
  • The Green Party would also halt UC, which they say is a “disaster waiting to happen” and aim to “eliminate the difference between being in and out of work altogether”, reducing the taper, increasing the Work Allowance and removing any behavioural conditions for receipt of the benefit.
  • UKIP don’t mention UC specifically in their manifesto.

So where has UC got to so far since rollout began back in April 2013 in the North West of England? 177 Job Centres have now dealt with over 85,000 people making a claim for the benefit. Of these, nearly 50,000 were actively claiming in March of this year and nearly one in three of these were in employment. This is one of the main differences between UC and the benefits that it replaces – it’s the same system whether you are in or out of a job. However, this figure of one in three in work is the same as at the end of 2013. While the stats don’t track what happens to claimants over time, ideally the proportion in work should be growing. The phased roll-out of UC began with single people, so most claimants currently are male (70%) and under 25 (53%). The introduction of UC for couples and families has started to change this picture to be more reflective of the plan for full implementation. These figures seem to show slow, steady but increasing progress.

Once established, the aim of UC should be to get more people into work and eventually off UC entirely as their earnings increase so that they do not need state financial support. Helping people who are in work to earn more per hour, by progressing or by working more hours, is the best way of ensuring work is a route out of poverty. Eventually, if and when UC is fully operational, most people on UC will be in a job. Providing effective support for this group will be challenging for the Department for Work and Pensions and others, such as Work Programme providers, to say the least - historically the state has generally left low-paid workers to their own devices and we don’t yet have good evidence about what works in helping to raise earnings.

JRF supports the principles behind UC, of simplifying the welfare system and of making work pay. There are nevertheless fundamental design issues, such as payment frequency and a harsh withdrawal rate that the next Government should look at. Universal Credit must be made to work but it can’t lower poverty on its own.

While the manifestos do include some potentially poverty-reducing policies, what they still all lack is a comprehensive and sustainable long-term strategy.