Wednesday, 17 October 2018

Universal discredit

Universal discredit
Yesterday, in the House of Commons, I asked the Minister for Work and Pensions a very simple question:
When universal credit is rolled out in Sheffield next month, will he guarantee that none of my constituents will be worse off?1
The Minister could have given a very simple answer – and one that thousands of Sheffield families wanted to hear. He could have just said ‘Yes.’
Instead, there was more ducking and diving than you’d see from the waterfowl at Rother Valley Park. His answer:
“it depends on people’s individual circumstances. This new benefit system is ultimately about making sure that we help people into work.”
So, let me just interpret this for you. He meant:
“No, of course I won’t give you a guarantee because many of your constituents will be worse off. That’s the incentive to get them to get a job, however insecure and low-paid.”
Let me be clear. Who would not support a simpler welfare benefits’ system than we have now? Who would not support a system which was designed to ensure that families in work are not worse off than similar families in receipt of benefits?
Although that is what is said about Universal Credit (UC)’s objectives, that is clearly not what is being delivered and thousands of families will be significantly worse off following a migration to universal credit from the current arrangements. Far from Theresa May’s ‘austerity is over’promise, we will see ‘additional austerity’ for many families and many communities.
UC was designed to lift people out of poverty but instead is leaving people in debt, rent arrears or forced to turn to food banks to survive. The Department of Work and Pensions’ (DWP) own research shows that 40% of claimants were still experiencing financial difficulties 9 months in to their claim.
The independent Institute for Fiscal Studies has said2 this week that ending austerity would cost a minimum of £19bn compared to current spending plans up to 2022-23 and even that would leave still mean £7bn in social security cuts.
That is why Secretary of State Esther McVey has had to admit that many families could lose as a result of transferring to claim UC. Half of lone parents and two thirds of working-age couples with children would lose the equivalent of £2,400 a year.
None of the current criticism is new. This is very similar to the findings – rubbished by Ministers at the time - of the independent Resolution Foundation3 in November last year which found that 3.2 million families are expected to be worse off under UC, with an average loss of £48 a week, and that lone parents who lose out will be £57 a week on average worse off.
In June this year, the National Audit Office (NAO) said4 that UC is failing to achieve its aims and there is currently no evidence that it ever will.
A wide range of organisations, including Citizens Advice, the Child Poverty Action Group and over 80 disability organisations have warned the government that its plans risk thousands of people losing support either temporarily or falling out of the system altogether.
There has been a massive rise in rent arrears – to social and private landlords – by tenants transferred to UC. Foodbank referrals have leapt more than 50% where UC has been rolled out.
This week, Ms McVey confirmed that the implementation timetable for universal credit has been put back again. It is now 6 years behind the original timetable. Two former Prime Ministers, Gordon Brown and John Major, have issued serious warnings about the impact of the roll out from next year.
The government has three choices:
  • Continue on its current course and introduce a new wave of enhanced austerity to many thousands of families and communities, or
  • Re-instate the £4bn planned cuts in UC resources to 2020 to prevent significant hardship, or
  • Scrap UC pending a significant redesign which will deliver the original ambitions, but require an appropriate budget.
The Chancellor has until his budget statement on 29th October to decide.