Universal Credit – internationally “unique” in its harshness, and headed for 7 million of us
by Ian Sinclair
Open Democracy
1 November 2017
Despite opposition both inside and outside parliament, the Conservative government continues to press ahead with rolling out their Universal Credit scheme. I asked Bernadette Meaden – an Associate of Ekklesia thinktank who writes about Universal Credit, welfare reform, and social and economic justice – to shed light on the complex debates around Universal Credit: why it was introduced, who it will affect, and how concerned citizens can resist it.
Ian Sinclair: What is Universal Credit? When was it introduced and where are we at with its ongoing rollout?
Bernadette Meaden: Universal Credit (UC) is the flagship policy of Conservative welfare reform, the brainchild of Iain Duncan Smith and the think tank he founded, the Centre for Social Justice. It is a single benefit for people on a low income, whether in work or out of work. It replaces six ‘legacy’ benefits; Jobseekers Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, Income based Employment and Support Allowance, and Income Support.
UC was the central plank of the Coalition government’s 2012 Welfare Reform Act, which was described as the biggest shake-up of the social security system in sixty years. The 2012 Act also introduced harsher benefit sanctions, the Bedroom Tax, the Benefit Cap, and Personal Independence Payments to replace Disability Living Allowance.
The implementation of UC began in 2013, for a small number of claimants who were single, able to work, and had no dependents, as the simplest cases on which to test the system. From the very beginning it was beset with technical difficulties. The rollout has taken much longer than originally planned, and costs have spiralled. It is now predicted that the full rollout will not be completed until 2022, by which time around seven million people will be drawn into the system.
IS: In several recent news reports The Guardian has stated the goal of Universal Credit is to simplify the benefits system. Is Universal Credit simply only about “simplifying” the benefit system or are there other motives behind its introduction?
BM: There appears to have been a range of motives behind the introduction of UC, and these, combined with seemingly a complete ignorance of life on a low income, are what give rise to its numerous flaws.
Iain Duncan Smith and his colleagues began with some very flawed assumptions and a fundamental misunderstanding of poverty, mistaking its symptoms for causes. Their ‘Broken Britain’ narrative said that poverty was caused by debt, addiction, poor educational attainment, worklessness and family breakdown. Poverty was not so much about an unjust distribution of wealth, but more about the behaviour of poor people. Fixing poverty meant fixing poor people and making them behave differently.
There was a preoccupation with people who were not working, and a belief that many had made a lifestyle choice to live on benefits. Because of this, making life on benefits far more difficult for people and thus driving or ‘incentivising’ them into employment became an overriding aim of welfare reform and UC. The fact that UC is also a benefit for people who are in work, or who cannot work because of ill health, disability, or caring responsibilities appears to be an irrelevance, with ‘making work pay’ and getting people into work still being citedas the justification for UC.
The suspicion and disrespect for people reliant on benefits even extended to seriously ill and disabled people, who have been treated with such harshness that the United Nations says the government has committed ‘grave and systematic violations’ of their human rights, leading to a ‘human catastrophe’. Almost unbelievably, UC continues this process, with the abolition of both the Severe Disability Premium and the Enhanced Disability Premium, and the slashing of the allowance for a disabled child. So whilst families with a disabled member are more likely than others to be living in poverty, many will be even worse off under UC. (NB For current claimants there is some transitional protection, so please don’t panic).
So it was openly stated that UC aimed to change the behaviour of claimants, on the apparent assumption that most were generally lazy, feckless and irresponsible. The decision to pay it monthly, in arrears, was designed to mimic the world of work ‘which will encourage personal responsibility for finances’ and ‘teach them to budget’. The payment of the housing element direct to claimants instead of to landlords was also intended to ‘encourage responsibility’.
One of the most remarkable features of UC is the introduction of in-work conditionality. This means low paid workers who may previously have claimed Housing Benefit but now rely on UC to make ends meet can be subject to sanctions which previously only applied to those who were not working. This is a radical (some may say extreme) move which may be unique in the world. The latest evidence suggests that people on UC are much more likely to be sanctioned than those on ‘legacy’ benefits, and the sanctions are more severe.
Whilst UC is sold to the general public as a simplification of the benefits system, it is sold to employers as giving them ‘access to a more flexible and responsive workforce’. Part-time jobs and zero-hours contracts have proliferated in recent years, because they suited employers, but UC seems designed to keep workers in this casual, insecure employment under constant pressure. They will be required to attend a Jobcentre and demonstrate that they are attempting to work more hours or increase their pay, on pain of sanction. So UC is paid monthly in arrears because it wants claimants to behave as if they have a steady and secure income, pressures them to try to increase their earnings, but enables and encourages employers to turn those same workers on and off like a tap.
Low paid, part time and temporary workers already have very little power – UC will sanction a worker who is fired for misconduct, leaves a job voluntarily, ‘or loses pay through misconduct’. This could give unscrupulous employers the whip hand, and mean workers on UC will be afraid to lose or leave a job, or even complain, no matter how badly they are treated.
The payment of UC to one bank account in the household, perhaps springing from that belief in the traditional family, means some women may no longer have independent access to money. This could be very bad for women in an abusive, coercive relationship. Split payments can be requested, but domestic violence organisations have said that this in itself may cause problems for vulnerable women.
Under UC, the two child limit is expanded so that eventually all families who make a new claim will be limited to support for two children, even if the three children were conceived years before the rule was introduced. The motivation for the two child limit seems to have been a rather resentful attitude towards poor people having children ‘at the taxpayers’ expense’. In welfare reform thinking, taxpayers and benefit claimants might as well be two different species, whereas in reality all claimants are also taxpayers.
UC is a fundamental change in the way social security operates. Since the inception of the welfare state people paid their National Insurance and then, if they fell on hard times, claimed benefits as their entitlement. As the founders of the post-war Welfare State intended, there was little stigma attached to claiming one’s entitlement.
Under UC, support will be meagre and conditional, and for many people it will come with so much pressure that they will do almost anything to avoid having to claim it. For people who believe that poverty is largely a matter of personal responsibility, and that redistribution of wealth and cash transfers to the poor should be kept to an absolute minimum, this will be welcome.
Even whilst he was overseeing the implementation of UC, Iain Duncan Smith was floating the idea of a personal savings account into which people would pay to insure themselves against sickness or unemployment. ‘I am very keen to look at it, as a long-term way forward for the 21st century’, he said. UC, it seems, is the flagship policy of a man who does not really believe in social security as we understand it, and is looking forward to the day the UK is more like the US or Singapore.
IS: What have been the effects of Universal Credit in the areas where it has been introduced already?
BM: Where UC has been introduced, the main effects have been a steep rise in debt, rent arrears, foodbank use, and homelessness. This is mainly due to the length of time people have to wait for their first payment, which in theory should be six weeks, but in practice can be several months. Even the official six week wait, which is a deliberate design feature, leads to these problems. The government says Advance Payments are available, but these are in the form of a loan, and repayments will be taken out of subsequent payments, leaving a meagre income even more meagre. Some people’s finances may never fully recover from the minimum six week gap with inadequate or zero income.
IS: What has been the response of organisations and charities that focus on welfare?
BM: Almost every charity and organisation that deals with welfare issues is horrified at the awful impacts they are seeing, with unprecedented levels of anger and concern. Citizens Advice recently warned that the full service rollout was ‘a disaster waiting to happen’. Foodbanks and other charities have also responded in practical ways of course, but there is a fear that as the rollout continues, these organisations could be overwhelmed.
IS: What solutions would you propose to the problems with Universal Credit?
BM: I would seriously question whether UC is fixable. There is a tiny kernel of a good idea there, with support that rises and falls with your earnings, and in theory the simplicity is attractive, but that attraction may be superficial. Behind this ostensible simplicity lies a fiendishly complicated IT system and a requirement for RTI, Real Time Information which must be frequently updated. The ‘simplification’ actually means that people reliant on UC may become more vulnerable to administrative error and IT glitches, because if something goes wrong, everything goes wrong. If all your eggs are in one basket, it is a disaster if that basket is dropped.
If UC was made more generous, if the conditionality and sanctions were removed, if a first payment was received in good time, if more resources were put into efficient administration, if all Department for Work and Pensions staff were required to treat claimants with respect, and if the numerous other problems were fixed then it could be less of a disaster. But there are so many problems built into its design it is difficult to see how it could be fixed, rather than starting again from scratch. But so much has been invested in UC now, politically and financially, we may be stuck with some version of it.
IS: What action do you recommend people concerned about Universal Credit take? Does the Labour Party offer a base for principled opposition?
BM: I would say make as much noise about it as possible. At the moment the government is simply refusing to recognise or acknowledge the scale of the problems UC is causing. The DWP has had years of practice, being in a permanent state of denial about the harm being caused to claimants, particularly those who are ill or disabled. Even letters from coroners linking deaths to DWP decisions, and condemnations from the UN have been dismissed. It has to become a major political issue which makes Conservative MPs fear for their seats, and the only way to do that is to raise it at every opportunity, making it impossible for them to ignore. And of course, as UC rolls out across the UK the hardship will steadily increase, so if you can volunteer or donate to a local foodbank, homeless shelter or any other organisation that is dealing with the fallout, so much the better.
As far as the Labour Party is concerned, I think Shadow Work and Pensions Secretary Debbie Abrahams really understands the sheer scale of the problems intrinsic to UC, and the depth of suffering being caused, and she has great compassion. At the moment I’m not aware that the Labour Party has any comprehensive plan to deal with UC, other than pausing it and taking stock. But when dealing with an unfolding disaster, stopping it unfolding is essential.
I would like to see Labour develop a progressive and supportive social security system which works in the current economy, by lifting the pressure and taking the risk away from individuals, rather than piling it onto them, as UC does. A Universal Basic Income or Universal Basic Services are possibilities. But yes, on the whole I would say that the Labour Party can offer a base for principled opposition, if it starts from a position of respect for people who need social security, and an understanding that the need for support arises from social and economic injustice, not personal failings.
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