I asked last week what the “end of austerity” would mean in practice, and warned that the vagueness of the pledge is more hostage to fortune than convenient wriggle-room. Even I did not expect a painful example of that problem to rear its head quite so quickly as it has, however.
The flashpoint lies in the leaked details of a briefing delivered by Esther McVey to her Cabinet colleagues about the impact the switch to Universal Credit could have on the finances of millions of households. The prospect of many families potentially facing a loss (a real loss, not one of those I’ll-get-less-of-a-future-increase-than-Labour-promise-me ‘losses’) of benefit income poses an obvious political problem.
Any talk of people losing out makes ministers – and marginal MPs – nervous at the best of times, particularly when they lack a Commons majority, Labour are on the attack, and there is a budget coming up. The issue could particularly affect working parents, it seems, which is particularly sensitive. The Conservatives are yet to get to grips with the serious problems they suffered among that demographic last year, be it on housing costs or banners on school gates about cuts, so no-one is very keen to open up a new can of worms in the same territory. And, of course, even people who aren’t directly affected might well come to be aggrieved about problems experienced by others – by their friends, family, and neighbours, or by the sight of knock-on effects in the wider community.
A similar issue has already affected Universal Credit before – remember the payment gap, compounded by requiring applicants to use a costly and mismanaged phone line to secure an advance? The reputation of a fundamentally right and justified reform was harmed by wrong decisions in its implementation, which triggered a public outcry and a Parliamentary rebellion. There is a real danger of that experience being repeated.
The root of McVey’s warning lies in George Osborne’s last budget. When Iain Duncan Smith first proposed Universal Credit, he did so on the basis that spending more in the short term to introduce a simplifying and transformative reform would pay long-term dividends for taxpayers, welfare recipients and the economy as a whole. Cameron and Osborne bought into that plan, but (as Frank Field argues in The Sun) Osborne later went back on the agreement following the defeat of planned reductions to tax credits – in what turned out to be his final budget, he raided the Universal Credit budget ahead of time.
Duncan Smith warned on this site back in 2016 that this decision would have painful consequences down the line, and damage the policy itself – he also cited the then-Chancellor’s pressure on DWP budgets as a reason for his resignation. Heidi Allen, who became one of the leading rebels in the row over payment delays, also expressed concern that Osborne’s decision would reduce the incomes of some of the least well-off.
I suspect we will hear more Tory voices raised on the topic between now and the Budget at the end of the month. It’s important to note that such concerns don’t stem from an opposition to the policy itself – welfare reform, and particularly the destruction of the benefits trap, remains a worthwhile enterprise and has strong Conservative support – but from a frustration at poor implementation of what’s generally agreed to be a correct principle.
The unspoken question, of course, is who is doing the leaking? One can never know for sure, but were the Work and Pensions Secretary to be making a case to Philip Hammond to undo the damage of his predecessor’s decision, a dose of awkward publicity and some resulting panic on the backbenches would not go amiss in that cause. The DWP would hardly be the first department to benefit from such convenient coverage during pre-budget negotiations. The difficulty for the Chancellor is that if it is seen to work then the tactic will become even more common, particularly now the Prime Minister has given ministers a pledge with which to challenge his customary argument about the need to be austere.