Scrapheap beckons for Universal Credit

Tories’ big welfare reform is set to be ditched. Matthew Partridge reports.


Esther McVey: admits many families will be poorer under universal credit
(Image credit: Copyright (c) 2015 Shutterstock. No use without permission.)

"It's rare that a government pauses the implementation of a flagship policy," says Isabel Hardman in The Spectator. "There's so much ego involved in these matters that to do so is to admit a failing."

But in the case of Universal Credit (UC) the Tories' plan to merge six existing benefits into a single payment the government has been forced to delay plans to roll out the new system to more claimants as fears grow across Parliament "that those who are already receiving the benefit are severely struggling".

Good in theory, bad in practice

The idea behind combining a number of different working-age benefits into a new single credit is "basically sound", says the Financial Times. Sadly, the rollout of UC has been a "shambles".All eight million Britons receiving benefits were due to be moved onto UC by October last year. Later, the target for completing reforms was moved to 2022. Now even that is regarded as ambitious.

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What's more, it's becoming clearer that the scheme "is also a front for deeper benefit cuts". Esther McVey, the work and pensions minister, admitted last week that millions of families could be up to £200 a month worse off when the roll-out is complete. No wonder former prime minister John Major has "bluntly warned" that pushing ahead "could lead to a repeat of the poll tax debacle of the early 1990s, which saw riots against the Conservative government".

The evidence of impending disaster has led Iain Duncan Smith, the former Tory leader who came up with the idea of UC, to call for a further £2bn to be pumped in to save it. Yet "the chances of universal credit working well with more money are slim", says Phillip Collins in The Times. Its proponents should have been aware similar schemes have been considered several times by previous governments and rejected as immensely complex to implement.

On the other hand, "the chances of it working without are zero". So given the prime minister is unwilling to put more money into it, logic suggests the best option is "to take the pain of the sunk cost and lost time and send the scheme for scrap". But despite the recent concessions, "there is no sign of the government preparing to change course".

Burning down the government

That could be an expensive mistake for the Tories, as they battle to overcome the perception they are "a party of rich people that governs for other rich people, and neither understands nor cares about the poor", says James Kirkup in The Daily Telegraph.

Arguing about whether UC "is a good idea being implemented poorly overlooks some very deliberate choices ministers made to make the scheme worse", such as cuts former chancellor George Osborne made to the amount that claimants can earn before they start losing benefits. Despite her recent talk of "an end to austerity", Theresa May "has stood by that cut". If UC "does burn her government down", May "should remember she had the chance to douse the flames".

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri