The case for Universal Credit is a strong one.
More importantly, the old rules too often penalised people for taking what work they could – be it part-time, or casual work – by stopping their payments outright as a result. That was effectively a punishment for doing the right thing, which created the benefits trap – by which the welfare system itself compelled people to stay unemployed, rather than reduce their income by choosing to work. The point of Universal Credit is that it removes that cruel and perverse incentive by allowing recipients to work as many hours as they wish, tapering rather than scrapping their payments as their income rises.
Furthermore, this is a simplifying reform. The welfare system has become a costly and confusing thicket of competing and clashing benefits, categories, bands, exemptions, credits and discounts, and simplifying at least some of that is a good thing to do for recipients, for the taxpayer, and for those administering it all.
For both of these reasons, the objective of Universal Credit is correct: killing off the benefits trap, encouraging and aiding people back into work, improving lives and saving money in the long run.
And yet the practicalities of its introduction have proved to be troubled – so much so that plans to extend the number of areas in which Universal Credit is used are currently under threat from a rebellion of backbench Conservative MPs.
At the heart of the problem is the fact that applicants must wait six weeks from putting in for Universal Credit to receiving a penny. By definition, many of those applying have very little or nothing at all; a presumption that they can make do for a month and a half without any income risks plunging some into hunger, deprivation or even homelessness. It is this which is driving concern among MPs about the impact of the scheme – a fundamentally positive reform, undermined by an unwise decision in its implementation.
An advance is available to tide recipients over, subsequently recouped by reducing later payments for a time, but that suffers from two problems.
First, some people are evidently falling through the gaps, either not applying for the advance or not receiving it in time to avert financial crisis. That could be due to bad advice from DWP and Jobcentre officials, or to the inescapable fact that not every applicant is necessarily equipped to further navigate officialdom to receive an advance payment – whatever the cause, the fact it is happening at all demonstrates that the process is not fit for purpose.
Second, the route to securing an advance – phoning the Universal Credit helpline – involves a cost for the applicant. According to Citizens’ Advice, the number costs up to 9p a minute on a landline or up to 40p a minute on a mobile. Elsewhere, it’s been reported that mobile costs can be up to 55p a minute.
Nowadays, many people don’t have a landline at all, and those with very low incomes often rely on pay-as-you-go mobile tariffs. The average call to the helpline (covering all queries) is said to last seven and a half minutes, but a call requesting an advance payment can last for up to 40 minutes, which would mean a £22 bill in the worst case scenario. It is patently ridiculous to apply such costs to people who by definition are only calling in the first place because they fear they do not have enough money on which to live. The visible failure of ministers to provide a satisfactory defence of the charges suggests that they know it, too.
Small wonder that MPs are threatening to rebel. It’s important to note that they do not seek to destroy the reform, but to fix these flaws in its application. When Heidi Allen, a chief would-be rebel on the topic, was called at PMQs yesterday, she chose to defend the merits of Universal Credit before putting her question:
“…the difference between Government Members and Opposition Members is that we believe in universal credit’s transformative properties and want it to work. And work it will, but we have to get it right. I thank the Secretary of State for Work and Pensions for promising on Monday to advertise more widely that advances are available to claimants, but many of us on the Government Benches feel that more people taking up those advances must surely mean that the in-built six-week wait just does not work.”
That critique is far harder for the Government to reject than the blanket opposition to any change which is Labour’s refrain. The Prime Minister agreed yesterday to meet with Allen and her colleagues – she would do well to listen to them and then swiftly address the issue, enabling the roll-out to continue as soon as possible while assuaging the concerns about the payment gap. The future of a good reform is at stake unless a poor decision on its implementation is corrected. If it is allowed to fail, a huge opportunity to transform people’s lives for the better will have been lost.